HMRC is consulting until 25 October 2019 on draft regulations making amendments to the legislation which extended the non-resident CGT charge on disposals of UK property with effect from April 2019.
The main effect of the amendments is to ensure that exempt investors such as pension funds will not lose the benefit of the exemption when investing in UK property-rich collective investment vehicles (CIVs).
This follows post-implementation discussions with industry representatives, which identified several areas where the new rules do not achieve their original intention. The regulations will have effect from April 2019, except for certain changes affecting elections, which will apply to disposals made after the regulations come into force. See bit.ly/2kRcxtZ.
The main amendments made by the regulations:
ensure that only principal companies of non-resident property groups will come within the definition of a CIV, meaning subsidiary companies will not be able to make elections for exemption themselves (for disposals made after the regulations come into force);
clarify the obligations on CIVs that have made transparency elections to report information to HMRC on partnership returns;
ensure that CIVs that existed at 6 April 2019, or are structured as partnerships, trusts or contractual schemes, are not disadvantaged because they fail, for purely technical reasons, to meet the diversity of ownership conditions;
ensure that exempt investors may continue to benefit from exemption when they invest indirectly in collective investment vehicles through holding structures; and
clarify that exemption elections by tax transparent offshore CIVs require direct ownership of an underlying investee company, meaning elections in respect of indirect interests are not permissible (for disposals made after the regulations come into force).
HMRC published draft guidance in the Capital gains manual in December 2018, which it will update to take account of comments received and to reflect changes made by these regulations before they take effect.
HMRC is consulting until 25 October 2019 on draft regulations making amendments to the legislation which extended the non-resident CGT charge on disposals of UK property with effect from April 2019.
The main effect of the amendments is to ensure that exempt investors such as pension funds will not lose the benefit of the exemption when investing in UK property-rich collective investment vehicles (CIVs).
This follows post-implementation discussions with industry representatives, which identified several areas where the new rules do not achieve their original intention. The regulations will have effect from April 2019, except for certain changes affecting elections, which will apply to disposals made after the regulations come into force. See bit.ly/2kRcxtZ.
The main amendments made by the regulations:
ensure that only principal companies of non-resident property groups will come within the definition of a CIV, meaning subsidiary companies will not be able to make elections for exemption themselves (for disposals made after the regulations come into force);
clarify the obligations on CIVs that have made transparency elections to report information to HMRC on partnership returns;
ensure that CIVs that existed at 6 April 2019, or are structured as partnerships, trusts or contractual schemes, are not disadvantaged because they fail, for purely technical reasons, to meet the diversity of ownership conditions;
ensure that exempt investors may continue to benefit from exemption when they invest indirectly in collective investment vehicles through holding structures; and
clarify that exemption elections by tax transparent offshore CIVs require direct ownership of an underlying investee company, meaning elections in respect of indirect interests are not permissible (for disposals made after the regulations come into force).
HMRC published draft guidance in the Capital gains manual in December 2018, which it will update to take account of comments received and to reflect changes made by these regulations before they take effect.
