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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15969
Experience:  International tax
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Bought a property in Jul 2013 ,525,000 using a non UK

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Bought a property in Jul 2013 for 1,525,000 using a non UK Limited company. Let until end of August 2014 then refurbished until January 2015 when we accepted an offer to sell for 2,470,000. It is not clear whether the sale will be CGT exempt because it was a non UK entity prior to the 5th of April 2015 or normal CGT will apply or ATED GCT will apply although the property wasn't in the scope of ATED being below the 2 million mark. Sorry I meant 2015. Also forget to say that the sale will be completed after the 5th of April 2015.

Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
At Autumn Statement 2013 the government announced that it will charge capital gains tax(CGT) on gains made by non-residents disposing of UK residential property, from April 2015.
All residential properties within the definition unlike ATED are within scope for CGT, regardless of their value.
ATED-related CGT charge limits the charge to properties for which the consideration for disposal exceeds a specified "threshold amount". This is currently £2 million and is due to decrease to £1 million from 6 April 2015 for gains accruing after that date.
The new rules will not apply to gains relating to periods before 6 April 2015. Taxpayers will have three options, as follows:
1 rebase to 6 April 2015 (in which case, any post-6 April 2013 gain may be liable to ATED-related CGT, if relevant for that period);
2 time apportionment of the gain unless the property is also subject to ATED-related CGT;
3 elect to compute the gain or loss over the entire period of ownership, mirroring the option under ATED-related CGT.
It is not important that the property was purchased prior to the date the rules changed. But the gain that is realized from the April date to the sale date.
The property is under the threshold for ATED so the CGT is relevant.
The rate for companies within the charge will be 20%, mirroring that for UK resident companies.
The change is complicated and I hope this information helpful.
TaxRobin and 3 other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you very much. I imagine that the situation will not change if completion will happen before the 5th of April. Please confirm.

Expert:  TaxRobin replied 2 years ago.
No the situation would not change. UK was one of the few countries that allowed a foreign owner to not pay CGT on situs property.