CG73782 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Individuals: Special rules, and computation: Default method computation, examples
1. Property is a residential property throughout ownership
2. Property not always a residential property
3. Pre-April 2015 gain and post-April 2015 loss
4. Pre-April 2015 loss and Post-April 2015 gain
1. Property is a residential property throughout ownership
Basic information:
Interest acquired 6 April 2012 for £300,000 and disposed of 5 April 2017 for £350,000
Wholly used (or suitable for use) as a dwelling throughout ownership period
Market value at 5 April 2015 £330,000
No election made under Para 2(1)
Total number of days in post-commencement ownership period 730
Total number of days within that period where the property was used wholly or partly as a dwelling 730
Calculating the NRCGT gain or loss
Stage 1
Notional post-April 2015 gain or loss
Disposal proceeds £350,000
Market Value at 5 April 2015 £330,000
Notional post-April 2015 gain £20,000
Stage 2
RD = 730
TD = 730
RD/TD x Notional post-April 2015 gain = £20,000
NRCGT gain £20,000
Calculating the gain or loss which is not an NRCGT gain or loss
The part of the gain which is not an NRCGT gain will not be subject to CGT unless it is brought into charge by other provisions. This second part of the computation will therefore not be strictly necessary for many people.
Step 1
Determine the amount of the notional pre-April 2015 gain or loss
Market Value at 5 April 2015 £330,000
Allowable deductions £300,000
Notional pre-April 2015 gain £30,000
Step 2
Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain
Notional post-April 2015 gain £20,000
NRCGT gain £20,000
£0
Step 3
Not relevant as there is no post-April 2015 loss
Step 4
Add Step 1 to Step 2
Step 1 £30,000
Step 2 £0
Gain which is not an NRCGT gain £30,000
Summary
Total gain throughout ownership period £50,000
(Disposal proceeds of £350,000 less allowable deductions of £300,000)
Divided into:
NRCGT gain £20,000
Gain which is not an NRCGT gain £30,000
2. Property not always a residential property
Basic information:
The same as example 1 except property is only wholly or partly used (or suitable for use) as a dwelling for 1 out of the 2 post-April 2015 years
Total number of days in post-commencement ownership period 730
Total number of days within that period where the property was used wholly or partly as a dwelling 365
Calculating the NRCGT gain or loss
Stage 1
Notional post-April 2015 gain or loss
Disposal proceeds £350,000
Market Value at 5 April 2015 £330,000
Notional post-April 2015 gain £20,000
Stage 2
RD = 365
TD = 730
RD/TD x Notional post-April 2015 gain = £10,000
NRCGT gain £10,000*
*If there was mixed use of the property in the post-commencement ownership period, the NRCGT gain (or loss) would need to be further apportioned on a just and reasonable basis. So, for example, if the property was half used as commercial premises and half as a dwelling, the NRCGT gain might be £10,000 x 50% = £5,000
Calculating the gain or loss which is not an NRCGT gain or loss
Step 1
Determine the amount of the notional pre-April 2015 gain or loss
Market Value at 5 April 2015 £330,000
Allowable deductions £300,000
Notional pre-April 2015 gain £30,000
Step 2
Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain
Notional post-April 2015 gain £20,000
NRCGT gain (assuming no mixed use) £10,000
£10,000
Step 3
Not relevant as there is no post-April 2015 loss
Step 4
Add Step 1 to Step 2
Step 1 £30,000
Step 2 £10,000
Gain which is not an NRCGT gain £40,000
Summary
Total gain throughout ownership period £50,000
(Disposal proceeds of £350,000 less allowable deductions of £300,000)
Divided into:
NRCGT Gain £10,000
Gain which is not an NRCGT gain £40,000
3. Pre-April 2015 gain and post-April 2015 loss
Basic information:
The same as example 1 except market value at 5 April 2015 is £375,000
Calculating the NRCGT gain or loss
Stage 1
Notional post-April 2015 gain or loss
Disposal proceeds £350,000
Market Value at 5 April 2015 £375,000
Notional post-April 2015 loss (£25,000)
Stage 2
RD = 730
TD = 730
RD/TD x Notional post-April 2015 loss = £25,000
NRCGT loss (£25,000)
Calculating the gain or loss which is not an NRCGT gain or loss
Step 1
Determine the amount of the notional pre-April 2015 gain or loss
Market Value at 5 April 2015 £375,000
Allowable deductions £300,000
Notional pre-April 2015 gain £75,000
Step 2
Not relevant as there is no post-April 2015 gain
Step 3
Determine the amount of the post-April 2015 loss remaining after the deduction of the NRCGT loss
Notional post-April 2015 loss £25,000
NRCGT loss £25,000
£0
Step 4
Add Step 1 to Step 3
Step 1 £75,000
Step 3 £0
Gain which is not an NRCGT gain £75,000
This gain is not chargeable unless it is brought into charge by other provisions. The default method of computation therefore may be the most advantageous method for the taxpayer in this example.
Summary
Total gain throughout ownership period £50,000
(Disposal proceeds of £350,000 less allowable deductions of £300,000)
Divided into:
NRCGT loss (£25,000)
Gain which is not an NRCGT gain £75,000
4. Pre-April 2015 loss and Post-April 2015 gain
Interest acquired 6 April 2010 for £300,000 and disposed of 5 April 2017 for £410,000.
Wholly used as a dwelling throughout ownership period
Market value at 5 April 2015 £260,000
No election made under Para 2(1)
Total number of days in post-commencement ownership period 730
Total number of days within that period where the property was used wholly or partly as a dwelling 730
Calculating the NRCGT gain or loss
Stage 1
Notional post-April 2015 gain or loss
Disposal proceeds £410,000
Market Value at 5 April 2015 £260,000
Notional post-April 2015 gain £150,000
Stage 2
RD = 730
TD = 730
RD/TD x Notional post-April 2015 gain = £150,000
NRCGT gain £150,000
Calculating the gain or loss which is not an NRCGT gain or loss
Step 1
Determine the amount of the notional pre-April 2015 gain or loss
Market Value at 5 April 2015 £260,000
Allowable deductions £300,000
Notional pre-April 2015 loss (£40,000)
Step 2
Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain
Notional post-April 2015 gain £150,000
NRCGT gain £150,000
£0
Step 3
Not relevant as there is no post-April 2015 loss
Step 4
Add Step 1 to Step 2
Step 1 £40,000
Step 2 £0
Loss which is not an NRCGT loss £40,000
Summary
Total gain throughout ownership period £110,000
(Disposal proceeds of £410,000 less allowable deductions of £300,000)
Divided into:
NRCGT gain £150,000
Loss which is not an NRCGT loss (£40,000)
In these circumstances it may be beneficial for the taxpayer to consider an election for one of the alternative methods of computation e.g. straight-line time apportionment under Para 2(1)(a). See CG73785 onwards.