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Govt to introduce Capital Gains Tax for foreign home sellers

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  • 05/12/2013
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Govt to introduce Capital Gains Tax for foreign home sellers
The government will introduce Capital Gains Tax for non-resident overseas property investors from April 2015, the Chancellor has announced.

In his Autumn Statement, George Osborne said while overseas investment in residential property is welcome, non-UK residents selling properties in the UK must pay a levy on any gains.

He told MPs this change was not about avoidance but fairness: “Britain is an open country that welcomes investment from all over the world including investment in residential property.

“But it’s not right that those who live in this country pay CGT when they sell a home that is not their primary residence while those who don’t live here do not.”

The government plans to consult on how best to introduce the new tax in early 2014. 

In a second move, the government is halving the final period exemption for CGT gains private residence tax relief in order to prevent multiple property owners exploiting the rules. 

The Intergenerational Foundation recommended a similar change in a report published last month. IF researcher David Kingman said the think-tank welcomes the announcement: “This will have the effect of increasing the capital gains tax-take from landlords.

“IF also welcomes the Chancellor’s measures to curb excessive profits from buy-to-let by international property speculators and recommends that HMRC follows the French example of lawyers taking CGT from source when selling.”

Under HM Revenue and Custom rules, the final three years of property ownership always qualify for relief. This applies even if the owner did not live there during the final three years.

It must have been their only or main home at some point during the time that they have owned it.

In addition, each tax year nearly everyone who is liable to CGT gets an annual tax-free allowance – known as the ‘Annual Exempt Amount’. Property sellers only pay Capital Gains Tax if their overall gains for the tax year is above this amount.

Delivering the Autumn Statement, Osborne raised GDP expectations for 2013 to 1.4%, well above the 0.6% predicted by the Office of Budget Responsibility in March.

Looking further ahead, he also raised GDP forecasts for 2014 from 1.8% to 2.4%.

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