Tax Advice for British Land or Property Owners
- Written by arounddb
As of April 5 this year, as much as 28% Capital Gains Tax (CGT) is payable in the United Kingdom for non-residents who sell land or property that is not their primary residence.
Due to the changes, it is important that non-residents have their investments re-valued as of April 5, so that the CGT is only applied to the gains made since April 5, not since the date of purchase.
Around DB spoke with Annette Houlihan from Carey, Suen and Associates Ltd, who gave this example about the recent changes.
“A property bought in London in the year 2000 for GBP300,000 could now be valued at GBP550,000,” Annette said.
“If you sell it now without an up to date valuation, your gain is GBP250,000, which means a potential CGT bill of GBP70,000 (250,000 x 28%). However, if you re-value it and sell it now, the gain is likely to be around GBP1,000 (based on 5% annual growth). This would make your tax bill GBP280 and you would have saved GBP69,720 in tax.”
It is clear that the simple action of re-valuing your asset can save you a huge amount of unnecessary tax and, with the right advice, it is easy to cleanly avoid paying a substantial tax bill.
HMRC will assume linear growth from the date of purchase and only apply CGT on the portion that is deemed to have occurred after April 6th - but it is their linear growth.
This is more paramount if you are keeping the property longer term than selling immediately.
It is also worth noting that CGT may be payable on UK residential property disposals by:
- non-resident individuals
- personal representatives of non-residents who have died
- any non-residents who are partners in a partnership
- non-resident trustees
- non-resident companies or funds