- Home » Expat News » Expat property capital gains tax action plan
Expat property capital gains tax action plan
| Published: | 2 Dec at 6 PM |
Want to get involved?
Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Become a Local Expert and contribute articles.
Get in touch today!
Following the announcement by the British government that those living overseas will be charged capital gains tax on sale of their UK properties, tax experts are concocting action plans to avoid liability.
Although the measure, due to be announced in the Autumn Budget statement on 5 December, is nominally aimed at wealthy foreign property investors, it’s feared that expats living overseas will be caught in its coils. London property prices have soared over the last several years and, until now, non-residents have been exempt from the hefty tax.
It’s uncertain as yet whether the tax will be levied on the original purchase price of any property, or on the price at the time the rules change. Charging on historic gains may well result in eye-watering tax bills for expats whose family home was purchased when their children were young.
Expats who bought their UK home many years ago are now being advised to transfer the property to a company as fast as possible. The recently introduced Annual Tax on Enveloped Dwellings (ATED) is a new tax on company-held property, but does not apply under a valuation of £2 million, nor does it apply to rented-out investment properties.
Should the family home be worth over £2 million, the best ploy is to place it in trust, thus saving it from inheritance tax as well, as the trust or company doesn’t die. Corporate ownership is easy and fast to effect, is relatively inexpensive and, if the UK expat has an alternative domicile overseas, shares in the company can also be transferred to a trust.
Although the measure, due to be announced in the Autumn Budget statement on 5 December, is nominally aimed at wealthy foreign property investors, it’s feared that expats living overseas will be caught in its coils. London property prices have soared over the last several years and, until now, non-residents have been exempt from the hefty tax.
It’s uncertain as yet whether the tax will be levied on the original purchase price of any property, or on the price at the time the rules change. Charging on historic gains may well result in eye-watering tax bills for expats whose family home was purchased when their children were young.
Expats who bought their UK home many years ago are now being advised to transfer the property to a company as fast as possible. The recently introduced Annual Tax on Enveloped Dwellings (ATED) is a new tax on company-held property, but does not apply under a valuation of £2 million, nor does it apply to rented-out investment properties.
Should the family home be worth over £2 million, the best ploy is to place it in trust, thus saving it from inheritance tax as well, as the trust or company doesn’t die. Corporate ownership is easy and fast to effect, is relatively inexpensive and, if the UK expat has an alternative domicile overseas, shares in the company can also be transferred to a trust.
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!
