A major change is coming on 6 April 2015 for non-UK residents who own UK residential property. The new tax will only tax any growth in value from 6 April 2015 onwards but it would make sense to have a professional valuation carried out as near as possible to 5 April 2015. This will reduce the chance of any disputes later with HMRC about how much the property was worth on that date and, therefore, how much capital gains tax (CGT) needs to be paid.
Any disposals of property at a gain will be exposed to UK capital gains tax at rates of 18%, 20% or 28%, depending on the size of the gain and whether the owner is a company.
Most non-resident individuals and trusts will be taxed at 28% unless the gain is very modest but companies will be taxed at the corporation tax rate of 20%, which might make company ownership more popular in certain circumstances.
The new tax adds another layer of complexity for overseas investors in the UK residential market but the UK is really only introducing something that many other countries have been doing for many years. As ever, the message is that investment decisions won’t be driven by tax but tax advice will be needed to ensure there are no hidden costs when projecting the investment return.
HMRC recommends that all non-uk residents value their properties for the 6th of April 2015 value date by a qualified surveyor, we have arranged competitive please contact us if you need help arranging your valuation.
