Capital Gains Tax for Overseas Residents – Planned Changes

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As you may be aware, the UK Government intends to introduce some important changes to the treatment of Capital Gains Tax for overseas residents.

From 6th April 2015 overseas residents will be liable to pay Capital Gains Tax on the adjusted profit arising from a disposal (sale) of a UK property.

The profit that will be liable to tax will only relate to any increases in the property’s value post the introduction date, this being 6th April 2015; any profit arising before that date will not be taxable.

FACTS

  • Capital Gains Tax will apply to most overseas investors including certain offshore structures.
  • Capital Gains Tax will only apply to gains made after 6th April 2015.
  • The tax rate ranges from 18-28% of the gain made after 6th April 2015 for individuals.
  • Assuming the property is not caught by the Annual Tax on Enveloped Dwellings (ATED) regime, the Capital Gains Tax rate for companies will be 20%.
  • In some cases Capital Gains Tax will be payable within 30 days of sale of the property
  • The gain can be calculated by apportionment of time or by way of a valuation as at 6th April 2015
  • There is no set requirement for a particular type of valuation to be carried out although any valuation can be challenged by HMRC.

OUR ADVICE

  • Whether you are selling now or in the future we recommend having a valuation carried out at the earliest opportunity whilst market evidence is fresh, although a valuation can also be completed retrospectively when you decide to sell.
  • Capital Gains Tax can also be mitigated on investments that have exchanged and not yet completed including off plan purchases.
  • We would advise having a valuation carried out by a suitably qualified RICS professional as evidence of the value of your investment at 6th April 2015 as this would be expected to hold more weight with HMRC than an estate agency market appraisal.
  • We recommend speaking to your tax advisor regarding how best to mitigate your Capital Gains Tax liability and we can put you in touch with an advisor if required.

We are delighted to offer clients a tailor made service, which consists of a bespoke short form desk based valuation with relevant comparable data carried out by a RICS surveyor based on information held by Currell and that from publicly available resources.

Should you wish to take this opportunity to arrange a valuation or if you have any other queries, please contact Simon Garfinkel, our Head of Professional Services for further information, by emailing s.garfinkel@currell.com or telephoning +44 20 7354 5050.