HMRC seeks feedback on amendments to property rich collective investment vehicles

Schedule 1 to Finance Act 2019 introduced new provisions extending taxation of gains accruing to non-UK residents to include gains on disposals of interests in non-residential UK property.

It also extended taxation of gains on residential property to include disposals made by widely held companies by certain investment funds and life assurance companies. The new rules apply to disposals made on or after 6 April 2019.

These regulations amend part of those rules specifically concerning “UK property rich” collective investment vehicles (CIVs) and their investors.

The proposed amendments follow representations made by stakeholders after the rules were introduced. According to the government, they ensure the legislation will work as had been intended.

In particular, the changes mean that investors who are exempt from tax on capital gains can benefit from that exemption when investing in these vehicles. They also remove unintended technical barriers to eligible CIVs making elections for transparency or exemption.

The changes are expected to mainly affect non-UK residents, but impacts are also predicted on CIVs and investors resident in the UK. 

The consultations are open until 25 October.