Significant changes to commercial property tax gains are due to come into force for non-UK residents, effective from April 2019.

This means that all capital gains on commercial property will now be within the scope of UK tax – creating a ‘level playing field’ for UK and overseas owners.

There will be implications, particularly within the real estate, hotel and property sectors, where acquisitions are made using a non-UK company in a jurisdiction such as Jersey, Guernsey or the Isle of Man.

The new tax rules have not been finalised, but it is anticipated will be based on the following principles:

  • All overseas investors of UK property to be subject to tax on gains from April 2019
  • Only gains accruing after April 2019 will be taxed
  • Property investment companies or partnerships will also be included within the new tax charge
  • In some instances there could be a requirement to report disposals within 30 days
  • Requirement to register for corporation tax in order to report the disposal

Non-UK investors will need to examine the new tax rules to discover exactly how the changes will impact their current investment structure.