UK Properties Owners To Pay More Tax
In the UK Budget last April the Chancellor of the Exchequer announced plans to level the playing field between UK residents and expats owning UK property. Currently, expats owning UK property for 5 years or more can sell without incurring any liability to UK Capital Gains Tax (CGT). This is not the case if you are UK resident.Consequently, UK property has been a fantastically tax efficient investment for expats over the years. Sadly, this situation is expected to come to an end in a little under 6 months’ time.
It is anticipated that the new rules will treat expats and residents alike. Sales of property will be assessed for CGT and where tax is due it will need to be paid. However, to assess a gain there needs to be a starting valuation and the basis for this calculation is now being debated. We may know more in the Autumn Statement which is on 3rd December.
A further blow for expats may be the removal of the CGT and Income Tax Personal Allowances. Currently if you have income arising in UK, even if you are non-resident, you can claim a personal allowance, which in the case of income tax is about GBP10,000. This means that you do not pay any tax on the first GBP10,000 of income in the UK. It is suspected that expats may no longer be able to claim this allowance from April 2015.
UK Property may still be attractive over the long term, especially if you plan to live in it or retire to UK and you want a step on the property ladder but it looks like it will be a little less tax efficient than it currently is in the future.
As always if you have any questions, comments or concerns please let me know.