Background
48.In broad terms, capital gains tax (CGT) is charged on chargeable gains accruing to a person on the disposal of an asset, after deducting any allowable losses, if they are resident in the United Kingdom in the tax year in which the disposal takes place.
49.Companies within the charge to corporation tax have been excluded from CGT and are instead charged to corporation tax on their chargeable gains.
50.The Government announced the introduction of the annual tax on enveloped dwellings (ATED) at Budget 2012, which introduces an annual tax on high value residential UK property owned by certain non-natural persons (NNPs). Legislation for the ATED is in Part 3 of the Finance Act 2013.
51.This extension of the scope of capital gains tax supports the ATED by taxing gains on disposals of high value residential UK property by certain non-natural persons within the scope of the ATED, principally companies. The charge applies to both UK and non-UK resident NNPs in respect of disposals made on or after 6 April 2013. A form of rebasing will apply to ensure that pre 6 April 2013 gains remain outside the scope of the new CGT charge. Gains and losses within the scope of the new CGT charge will be excluded from the scope of corporation tax.
52.CGT will be charged at a rate of 28% (the rate applicable to trustees and individuals who pay income tax at the higher rate 40%), on disposals of UK residential property where the consideration exceeds £2m. The consideration threshold will be reduced proportionately where the person owns only part of the property or disposes of part of it, to ensure that the charge cannot be avoided though fragmentation.
