Capital Taxes

Gains on UK Dwellings

Non-residents

People who are not tax-resident in the UK do not pay UK capital gains tax when they sell a property in the UK, although the gain may well be taxed in the country where the individual is tax-resident. 

From 2015/16 non-resident owners of UK homes (dwellings) will have to pay UK capital gains tax on the gain that arises on the sale of their home for periods from 6 April 2015 onwards. However, the non-resident individual can elect for their UK home to be treated as free from capital gains tax, if they spend at least 90 midnights in that home in the UK during the tax year. Those 90 days may be spread over several properties if they own several homes in the UK. Spending 90 days in the UK could make the individual tax-resident in the UK for the tax year in question.

UK Residents

This 90 day rule will also apply to UK residents who own a second home outside of the UK. Currently the owner can elect for an overseas home to be treated as free of capital gains tax. From 6 April 2015, an overseas property will only be eligible to be free of UK capital gains tax if the owner spends at least 90 midnights there during the tax year, or is treated as being tax resident in the country where the property is situated. It is possible to be tax resident in more than one country concurrently.

Entrepreneurs' Relief
Entrepreneurs' relief was introduced from 6 April 2008 to apply a 10% tax rate on gains made on disposing of a business, part of a business, or shares held in a personal company.

Incorporation

Entrepreneurs' relief has always been available to apply to gains that arise on the incorporation of a business, which often involves the transfer of goodwill created by the unincorporated business into the company that takes over the trade. The Government has decided that this use of entrepreneurs' relief is unfair. From 3 December 2014 entrepreneurs' relief will not be available for gains arising on the transfer of goodwill on the incorporation of a business.

EIS or SITR Shares

Where an individual makes a gain that taxpayer can defer tax on the gain by investing in Enterprise Investment scheme (EIS) shares, or shares or loan notes issued under the social investment tax relief (SITR) scheme. Where such an investment is made any entrepreneurs' relief due on the original gain is normally lost. For investments under EIS or SITR from 3 December 2014, the entrepreneurs' relief can be retained, and may be claimed when the EIS or SITR investments are subsequently disposed of.