Budget 2012 announced a measure to extend the Capital Gains Tax charge to non-resident non-natural persons (NNPs) on disposals of UK residential property valued over £2 million. The charge will apply to gains on disposals on or after 6 April 2013 and will broadly apply to disposals by those NNPs liable to the Annual Residential Property Tax.

By way of reminder, the Annual Residential Property Tax is a tax payable by companies that own residential property valued at more than £2 million on 1 April 2012. It is due to start on 1 April 2013 and is worked out using a banding system based on the value of the property.

In December, the Government asked for further comments on extending the charge to UK resident non-natural persons. Following this, the Government has decided that Capital Gains Tax will also apply to UK resident non-natural persons that are resident in the UK in respect of gains built up 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.

Draft legislation has been published containing provisions that include UK resident companies within the scope of the charge and providing 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.