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Property
Regime change for non-UK resident owners of UK land or property
By Lynette Chaudhary, International Tax & Research Director, STM Fiscalis Ltd
The changes to extend the UK’s course of a qualifying trade, the simple
grip on the taxation of UK land and immovable UK property (UK land or property) came into law in April. These changes are onerous and
therefore any Gibraltar resident (or in fact any non-UK resident) owner of UK land or property should take note.
All types of UK property
From 6 April, gains made on the disposal of all types of UK land or property, directly or indirectly held, are chargeable to UK tax, regardless of the residency of the owner.
The inclusion of indirect disposals means that, for example, gains made on the disposal of shares in a company holding UK land or property will fall within the UK tax charge. This applies if the company is “property rich” and the shareholder has at least a 25% interest. Whilst there is a tax exemption for indirect disposals if the property is used in the
activity of letting out property is in itself not a trade.
For Gibraltar resident owners, this means that gains made on the direct or indirect disposal of all types of UK land or property are within the scope of UK tax. For Gibraltar resident individuals or trusts non-resident UK capital gains tax (NRCGT) needs to be considered, and for Gibraltar resident companies UK corporation tax is payable on any gains realised on the disposal of the UK land or property.
The applicable rate of UK tax depends on the circumstances, for example:
l whether the property is residential or not
l if it’s a direct or indirect disposal
l if it’s a disposal by a company or by another entity or person, and
l for individuals the amount of their taxable income and other gains in the tax year in which the disposal occurred.
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