![\"Tax](\"https:\/\/www.benhams.com\/news\/wp-content\/uploads\/2015\/01\/money-tax-900x396.jpg\")
The UK has a well deserved reputation for its fair and liberal tax regime. And while this remains true, we are currently seeing some changes which affect both overseas and UK-based landlords. This is our summary of the latest developments.\n<\/p>\n
The UK has a well deserved reputation for its fair and liberal tax regime. And while this remains true, we are currently seeing some changes which affect both overseas and UK-based landlords. This is our summary of the latest developments.
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Capital Gains Tax (CGT) will be introduced for all overseas owners from April 2015. It will apply to future gains from April 2015 and any previous gains (before April 2015) will be exempt.<\/p>\n
The introduction of this tax brings the treatment of the sale of UK residential property by non-residents in line with that of UK residents.<\/p>\n
Following on from the consultation document issued in March 2014, the Government has released a summary of responses that were received and draft legislation for the 2015 Finance Bill which outlines how the new Capital Gains Tax (CGT) on the sale of UK residential property will operate, effective from April 6th<\/sup> 2015.<\/p>\n Exclusions<\/strong> Rate \u2013 companies<\/strong> Rate \u2013 individuals<\/strong> Rate \u2013 trustees<\/strong> Losses<\/strong> Private residence relief (PRR)<\/strong> A person will only be permitted to claim PRR in any year of ownership if they were a tax resident in the UK in the year of disposal or have resided in that property for 90 days in that year. Where the property has been the main residence at any time over the period of ownership, the gain in the final 18 months of ownership will qualify for PRR.<\/p>\n Effective date<\/strong> Arranging valuations<\/strong> We have negotiated rates with a specialist surveyor who can carry out valuations on your behalf.<\/p>\n
\nCGT will not apply on communal residential property. Any disposal of UK residential property made by ‘diversely held institutional investors’ will also be excluded. Neither will the charge be applied to any gains made on the sale of UK commercial property.<\/p>\n
\nFor non-resident companies, the tax will be charged at 20%, the same as the Corporation Tax rate for UK companies \u2013 there will be a limited indexation allowance to account for inflation.<\/p>\n
\nThe rate for non-resident individuals will be the same as for UK residents, which is 18% or 28%, depending on the total UK income and gains in the tax year of the disposal. There will be an annual exemption of gain which is currently \u00a311,000.<\/p>\n
\nFor non-resident trustees the tax will be 28%, the same as for UK resident trustees. The annual allowance for trustees is half the amount available to individuals.<\/p>\n
\nLosses can be carried forward to offset against any future gains on the sale of UK residential property.<\/p>\n
\nCurrently, UK individuals are exempt from paying CGT on the sale of their principal place of residence. This will also be available to non-residents, however, a new rule is being introduced for properties located in a country in which the individual is not resident.<\/p>\n
\nThe charge is effective on any gains made after the introduction of the tax on April 6th<\/sup> 2015. Any gains from that date can be either calculated by revaluing at that date or by time apportioning the gain over the period of ownership. In certain circumstances, the taxpayer may choose neither to rebase nor time apportion and instead use the original purchase price when calculating the gain.<\/p>\n
\nIt is widely expected that most non-resident property owners will prefer to revalue their units which is considered the default position.<\/p>\n