CG26810 - Individuals: effects of residence and domicile for departures on or after 6 April 2013 and general rules from 6 April 2013: arrival in and departure from UK: temporary non-residence: interaction with NRCGT
TCGA92/S2(7A)*
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 and applies for disposals to 5 April 2019.
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 non-resident capital gains rules were amended in their scope for disposals from 6 April 2019, see CG73920 onwards and in particular CG73960. 听
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The example below considers a more complicated scenario for a disposal before 5 April 2019 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 2014 he leaves the UK to travel abroad indefinitely. His is not UK resident from 6 April 2014 and his UK property is let from 6 April 2014 听until 5 April 2017. From 6 April 2017 the property is empty and is sold on 5 October 2017 for 拢299,000. The value of the property at 6 April 2015 was 拢190,000.
The property disposal on 5 October 2017 is within the scope of NRCGT**.
Mr A returns to the UK and is resident from 6 April 2018. The period of return is the 2018-19 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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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 April 2016 to 5 October 2017 (Last 18 months) 18/30 x 拢109,000 = 拢65,400
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Lettings relief restricted to 拢40,000 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
(period 6 April 2015 to 5 April 2016 i.e. 12/30 x 109,000)听听听听听听听听听 听听听听听听听听听听听 拢43,600
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65,400
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NRCGT** gain chargeable = 拢3,600 i.e. 拢109,000 鈥� (拢65,400 + 拢40,000)
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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67,727听听听听听听听听听听听 (拢149,000 x 30/66)
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PRR due:
Period 6 April 2016 to 5 October 2017 (Last 18 months) 18/30 x 拢67,727 = 拢40,637
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Lettings relief restricted to 拢27,090 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 2015 to 5 April 2016 i.e. 12/30 x 67,727)听听听听听听听听听听听 听听听听听听听听听听听 拢27,090
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40,637
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NRCGT** gain chargeable = nil i.e. 拢67,727 鈥� (拢40,637 + 拢27,090)
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Option 3 鈥� Para2(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 2014 (actual occupation) 24 months
Period 6 April 2016 to 5 October 2017 (Last 18 months)
听听听听听听听听听听听 42/66 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94,819
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Lettings relief restricted to 拢40,000 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 April 2016 i.e. 24/66 x 149,000)听听听听听听听听听 听听听听听听听听听听听 拢54,181
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94,819
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NRCGT** gain chargeable = 拢14,181 i.e. 拢149,000 鈥� (拢94,819 + 拢40,000)
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Gains for s10A* purposes
The gain on disposal of the property in 2017-18 would be 拢14,181 (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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- 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10,581听 听 (拢14,181 - 拢3,600) 听听听听 听
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- If an election under para 2(1)(a) has been made for the NRCGT** gain
Gain would be 拢14181听听 (拢14,181 鈥� nil)
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- If an election under para 2(1)(b) has been made for the NRCGT** gain
Gain would be nil听听听听听听听听听听听听听听听听听听听听听 (拢14,181 - 拢14,181)听听听听听听听听听听听听听听听听听听听听听听听听听听听听 听听听听听听听听听听听
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The听 2017-18 gain 听(either 1, 2 or 3 above) together with any other gains of that year or other years within the temporary period of non-residence would be added together and treated as accruing in the period of return i.e. 2018-19.
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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.
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*These provisions were re-written for disposals from 6 April 2019 see CG10150.
**In addition the scope of the rules charging non-residents on certain disposals were extended from 6 April 2019听to include direct听听and indirest disposals of interests in UK real property see CG73920 onwards.听
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