Capital Gains Tax for non-residents on UK property

Dominic Coyle answers readers’ questions

I read your article on the UK introducing capital gains tax on property sales by non-residents. Towards the end, you say: "From the point of view of the Irish tax authorities, your £20,000 gain comes to €25,615 at the current rate."

Does this mean the Irish authority also uses the April 5th date as a purchase cost (the same rule that applies in England)?

Ms RP, email

I remember that article well although it was some time back – September 2014.

The UK was introducing capital gains tax on the sale of UK property by non-resident from April 5th, 2015 – the start of its 2015/16 tax year – in an effort to stem some of the bubble transactions being undertaken by foreign buyers, especially in the already inflated London market, secure in the knowledge that they would not face any UK tax charge as non residents.

It was not really directed at mostly small-scale, Irish-based investors, many of whom would have bought the property when they lived in the UK and retained it when they later moved home or to some other country, but they are caught up in it nonetheless.

The funny thing is I recall being very satisfied with how comprehensive the piece was at the time. But you rightly point to a fairly significant gap in the reply.

While the UK was only looking at any increase in the value in the property from the time the new rules were introduced in April 5th, 2015, the Irish Revenue’s reach is longer.

Under Irish rules, Irish taxpayers are liable to tax here both on income earned abroad and on capital gains made on assets, including property, bought and sold abroad.

As I mentioned in the piece, there is provision under the terms of the double taxation agreement between ourselves and the British to allow a credit on your Irish tax bill for any tax paid in the UK. However, in the example I gave – part of which you quote above – I assumed the relevant gain was only from April 5th, 2015. This is not so, of course. The Irish Revenue will hold you liable for tax over the full period of ownership of the UK property even though the British are only concerned with gains since April 2015.

Anyone interested in the other details of the UK arrangements for capital gains made by non-residents on UK property can find the original article at http://iti.ms/2kQCJPm .

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.