CG26310 - Individuals: effects of residence, ordinary residence and domicile: temporary non-residents: arrival and departure from UK: temporary non-residence: interaction with NRCGT 鈥� year of departure 2012-13 or earlier
A disposal of an interest in UK residential property by an individual in a year of non-UK residence or the overseas part of a split year is caught by the charge to NRCGT. Guidance on NRCGT is from CG73700 onwards.
Where the disposal is also within the scope of TCGA92/S10A an adjustment is required to ensure that a double charge does not arise on the NRCGT gain.
In a straightforward example, if the chargeable gain on the disposal of the interest for the whole period of ownership was 拢20,000, but that disposal also gave rise to a gain chargeable to NRCGT of 拢5,000 for the period of ownership from 6 April 2015, then only a gain of 拢15,000 would be caught by TCGA92/S10A.
The following example considers a more complicated scenario where private residence relief and lettings relief is also due.
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Example
Mr A is resident in the UK and acquires a property on 6 April 2012 for 拢150,000 that he lives in as his residence.
On 5 April 2013 he leaves the UK to travel abroad indefinitely. He is not UK resident from 6 April 2013 and his UK property is let from 6 April 2014 until 5 May 2015. The property is then used by a relative for 2 months before being let again from 6 July 2015 until 5 October 2016. It was empty until sold on 5 January 2017 for 拢299,000. The value of the property at 6 April 2015 was 拢190,000.
The property disposal on 5 January 2017 is within the scope of NRCGT.
Mr A returns to the UK and is UK resident from 6 April 2017. The year of return is the 2017-18 tax year.
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The amount of NRCGT gain depends on whether an election is made under Para 2 Sch 4ZZB TCGA92.
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NRCGT Option 1 - No election made:
Disposal proceeds听听听听听听听听 拢299,000
Value at 6 April 2015听听听听 拢190,000
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Gain before any PRR听听听听 拢109,000
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PRR due:
Period 6 July 2015 to 5 January 2017 (Last 18 months) 18/21 x 拢109,000 = 拢93,429
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Lettings relief restricted to 拢5,191 i.e. lesser of听听听听听听听听听听听听听听听听听听听听听听听听 拢40,000
Gain by virtue of letting from April 2015听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 听听听听听听听听听听听
(6 April 2015 to 5 May 2015 i.e. 1/21 x 109,000)听听听听听听听听听听听听听听听听听听听听听听 听听听听听听听听听听听 拢5,191
PRR due听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢93,429
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NRCGT gain chargeable = 拢10,380 i.e. 拢109,000 鈥� (拢93,429 + 拢5,191)
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NRCGT Option 2 鈥� Para 2(1)(a) straight-line time apportionment election
Disposal proceeds听听听听听听听听 拢299,000
Cost听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢150,000
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Un apportioned gain听听听听听 拢149,000
Post April 2015 gain听听听听听 拢54,895听听听听听听听听听听听 (拢149,000 x 21/57)
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PRR due:
Period 6 July 2015 to 5 January 2017 (Last 18 months) 18/21 x 拢54,895 = 拢47,053
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Lettings relief restricted to 拢2,614 i.e. lesser of 听听听听听听听听听听听听听听听听听听听听听听听 拢40,000
Gain by virtue of letting听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听
(period 6 April 2015 to 5 May 2017 i.e. 1/21 x 54,895)听听听听听听听听听听听听听听 拢2,614
PRR due听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢47,053
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NRCGT gain chargeable = 拢5,228 i.e. 拢54,895 鈥� (拢47,053 + 拢2,614)
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NRCGT Option 3 鈥� Para 2(1)(b) retrospective basis election
Disposal proceeds听听听听听听听听 拢299,000
Cost听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢150,000
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Gain听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢149,000
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PRR due:
Period 6 April 2012 to 5 April 2013 (actual occupation) 12 months
Period 6 July 2015 to 5 January 2017 (Last 18 months)
听听听听听听听听听听听 30/57 x 拢149,000 = 听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢78,421
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Lettings relief restricted to 拢33,983 i.e. lesser of 听听听听听听听听听听听听听听听听听听听听听 听听听听听听听听听听听 拢40,000
Gain by virtue of letting听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听
(period 6 April 2014 to 5 May 2015 i.e. 13/57 x 149,000)听听听听听听听听听听 听听听听听听听听听听听 拢33,983
PRR due听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 拢78,421
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NRCGT gain chargeable = 拢36,596 i.e. 拢149,000 鈥� (拢78,421 + 拢33,983)
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Gains for s10A purposes
The gain on disposal of property in 2016-17 would be 拢36,596 (in this example this is the same as in option 3) however this amount must be reduced by the NRCGT gain that accrued.
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1) If no election had been made under par 2 Sch 4ZZB TCGA 92 for the NRCGT gain:听听听听听听听听听听听听听听听听
Gain would be 拢26,216 (拢36,596 - 拢10,380)
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2) If an election under para 2(1)(a) has been made for the NRCGT gain
Gain would be 拢31,368 听听(拢36,596 鈥� 拢5,228)
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3) If an election under para 2(1)(b) has been made for the NRCGT gain
Gain would be nil (拢36,596 - 拢36,596)
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The听 2016-17 gain听 (either 1, 2 or 3 above) 听together with any other gains of that year or other intervening years within the temporary period of non-residence would be added together and treated as accruing in the year of return i.e. 2017-18.
It cannot be assumed that the individual will have made an election under para 2(1)(b). With the availability of the annual exempt amount option 1 or 2 above may have been chosen. Details of any elections made will have been included on the NRCGT return.