Taxation of Chargeable Gains Act 1992 Schedule 4AA paragraph 15

Calculation of residential property gain if election made under paragraph 14

Schedule 4AA paragraph 15 explains how to calculate the residential property gain on a direct disposal of UK land by a non-resident, where the person has elected under paragraph 14 for the retrospective basis of calculation rather than the default rebasing to 5 April 2019.

• Where a non-resident elects under paragraph 14 for the retrospective (whole-life) basis, the overall gain or loss on the disposal is calculated by reference to the original acquisition cost rather than a rebased April 2019 value.
• The portion of that overall gain which counts as a residential property gain is determined by applying the rules in Schedule 1B to TCGA 1992, which apportion gains between residential and non-residential use over time.
• Schedule 1B is applied with modifications: the definition of the "applicable period" and the rules about when an interest in land becomes chargeable are adjusted to reflect the particular circumstances of non-resident disposals and the retrospective election.
• The distinction between residential and non-residential property gains matters because different capital gains tax rates may apply to each category, so correctly identifying the residential property gain element is essential for computing the tax due.

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