UK capital gains tax on land sale explained

Keren Bobker discusses the planned changes on the UK capital gains tax.

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About 20 years ago, I inherited a piece of land equally with my sister. She lives in the UK and I have been living abroad since 1982. We intend to sell the land. Can you inform me as to whether the new CGT (Capital Gains Tax) applies to the sale of land and, if so, how would the CGT due be calculated. MN Abu Dhabi

Under the current rules pertaining to UK capital gains tax, MN would not be liable to pay tax on any gains since he took half-ownership of the land, assuming he has been deemed UK non-resident for tax purposes for more than five full tax years. Following an announcement in the autumn statement in December 2013, this is set to change but the exact details are not yet known as the legislation is in a consultation period and we are awaiting the outcome. Any changes are due to take effect from April 6, 2015, but it is likely to be at least the end of this year before final rules are confirmed. It is not expected that the changes will be backdated, but the big question is whether there will be a “rebasing” of the base cost to April 5, 2015 values. Many commentators are confident this will be the case, on the basis that it would be unfair to retrospectively tax foreign owners of UK property. There has been no mention of how land will be affected, but this may depend on the status, as farmland has often been treated differently to land with planning permission for residential use. As mentioned, there was little detail in the autumn statement, which stated: “The government will introduce CGT on future gains made by non-residents disposing of UK residential property from April 2015”. As the proposals are really designed to catch non-resident property owners, it may be that land is exempt from these rules and that the existing regulations will apply, but final confirmation will not be available until this change passes into legislation.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at

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