The UK government is to introduce a capital gains tax on overseas buyers looking to purchase a property in the country.
As part of the Autumn budget, Chancellor Phillip Hammond revealed that the tax would be levied on any gains made by non-residents on sales of all types of UK property.
A document released alongside the budget statement read: “Unlike most other major jurisdictions, the UK does not currently exercise its full taxing rights where non-residents dispose of non-residential property. This puts non-residents at an advantage over UK residents. It also drives the creation of complex offshore structures to hold property, which can facilitate avoidance.”
The government has stated that they would like the tax changes in place by 2019.
The new rules will also apply to investors buying companies that own buildings, as well as those directly purchasing assets, the consultation document shows. However, some institutional investors may be exempted from the tax changes.
The move has caught many in the real estate industry by surprise and has raised some fears that it will significantly reduce the appeal of UK property to overseas buyers. The commercial property market in the UK, particularly in London, is dominated by overseas buyers and some critics believe that this move could harm an important economic stream at a time when uncertainty surrounding Brexit is at its peak.
Article published 23rd November 2017