CG73758 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Disposals of a UK Residential Property Interest: Building land and off-plan disposals

As mentioned earlier (CG73743), Sch B1/para 1(3) contains a special provision for the case where a disposal of an interest in UK land subsists under a contract for an off-plan purchase. This is defined at Sch B1/para 1(6) as a contract for the acquisition of land consisting of, or including, a building or part of a building that is to be constructed or adapted for use as a dwelling.

An interest in bare building land is not a residential property interest. It would only become a residential property interest once construction works commence. So, where a person acquires a development opportunity by, say, purchasing the freehold of a site, but sells that site before development starts, no liability to non-resident CGT would arise.

However, the legislation does not extend this treatment to speculators who purchase property ‘off plan’. Until such time as the building is constructed and conveyed, the person’s asset is a ‘right to acquire’ the property. Where there is a right to acquire a UK residential property interest, and the right is disposed of before, during or after construction, that disposal is subject to non-resident CGT in the same way as if it were the disposal of a UK residential property interest.

In other words, a mere interest in bare land in the UK is not a residential property interest, and is not within the scope of the legislation. But if the interest is a right to acquire UK residential property at such time as it is built, that is within the scope of the new provisions and therefore chargeable, if the right is disposed of.

See also Sch 4ZZB/paras 10 and 21 on the treatment of interests under contracts for off-plan purchases (discussed at CG73801).