Customers of Swiss financial institutions who own UK property need to be aware that they may be subject to UK capital gains tax on any gains upon disposal arising after April 2019, even if they are not UK residents.
Effective April 2019, non-UK residents are subject to UK tax on gains arising from direct or indirect disposals of all types of UK land and real estate as well as disposals of interests in UK property-holding entities. The change affects all foreign investors in UK property, including real estate funds. Accordingly, this tax levy must be considered by customers of Swiss financial institutions on making UK real estate investment or disposal decisions.
Swiss financial institutions need to be aware that investors in “UK property rich” collective investment vehicles (CIVs) may have an obligation to report and pay UK capital gains tax upon the receipt of dividends and/or disposal of their interests in the CIV. This is unlikely to affect many CIVs available on the market in Switzerland due to a 75% threshold.* Nevertheless, consideration must be given before investing in any CIV that holds a considerable proportion of UK property (since the 75% threshold is only determined at the date of disposal, and is also considered separately for each holding vehicle within a CIV structure).
*Interests in entities deriving at least 75% of their value from UK land & real estate (“UK property-rich” entities) when the investor has a 25% or more interest in the property-rich entity. However, the 25% de minimis does not apply in the case of interests in UK property-rich collective investment vehicles (CIVs).
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