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FB 2013: New CGT charge extended to UK resident companies

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The new capital gains tax charge on non-resident non-natural persons disposing of UK residential property worth more than £2m will be extended to UK resident non-natural persons, the government has announced. ‘Non-natural persons’ are, broadly, companies and collective investment schemes.

HMRC confirmed in an explanatory note that CGT will be charged at 28% – the rate applicable to an individual’s gains above the income tax basic rate band – on disposals of UK residential property where the consideration exceeds £2m.

Technical consultations were launched on 31 January on additional draft legislation for Finance Bill 2013 relating to CGT, the new annual residential property tax (ARPT), stamp duty land tax (SDLT) and allowances for the oil and gas industry.

Exchequer secretary David Gauke said in a written ministerial statement: ‘The [CGT] charge will apply to gains on disposals on or after 6 April 2013. Increases in the value of property before 6 April 2013 will not be subject to CGT under this measure. Liability to CGT will be closely aligned with liability to the ARPT on the property disposed of.

‘Following consultation, the government have decided that, for consistency, capital gains tax will also apply to non-natural persons that are resident in the UK in respect of gains built up on or after 6 April 2013.

‘The draft legislation published today therefore contains provisions that include UK resident companies within the scope of the charge. The draft legislation provides that corporation tax will apply to the part of any gain built up before 6 April 2013, with the new capital gains tax charge applying only to the gain built up on or after 6 April 2013.’

Detailed rules governing the new annual residential property tax (ARPT) have been published, and there is clarification of reliefs intended to exempt genuine commercial activities from the charge, HMRC said. There are revised rules to provide equivalent reliefs from the higher rate of stamp duty land tax (SDLT).

Draft legislation was also published on the restriction of allowances for certain decommissioning expenditure in the oil and gas industry. ‘The drafting of one clause published on 11 December has been found to be defective and a revised draft clause addresses this. Most of the relevant legislation was published on 11 December but a small amount was omitted and is now published,’ Gauke said.

Comments are invited on the CGT, ARPT and SDLT measures by 22 February, and on the oil and gas measures by 18 February.