Overseas property-owners will pay capital gains tax (CGT) on their UK homes from April 2015, under changes announced by the Chancellor in his Autumn Statement in December.
Under the current system, only UK residents pay CGT tax when they sell a second home, which is typically levied at 28 per cent.
Richard Barber, partner at prime central London estate agency W.A.Ellis, commented on the new legislation: “The likelihood of applying CGT to profits made by non-residents on property in Britain has been widely trailed and will now align the UK with many other countries. We are not surprised by the Chancellor’s announcement of this new tax, but are pleased that he has been specific with regard to the quantum and date of implementation.
“In our experience, it is uncertainty over tax measures that has previously derailed our market, however, we are confident that these specific measures will not impact majorly upon prime central London. It is most unlikely that vendors will seek to sell their investments due to the implementation of CGT as it will only be charged upon future gains from April 2015. Many will consider this to be insignificant when compared with the safe haven investment, strong yield and capital appreciation property delivers in the long term.
“Some will consider that the new tax (effectively upon foreign investors) levels the playing field, as British based buy-to-let investors are already obliged to pay CGT on their properties which are not their principal residence. The attraction of London as a safe haven and as a potential residence / pied-à-terre for foreign investors and their children, is a stronger driver than potential capital gain post 2015.”