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British taxman hits out again at expat property investors
| Published: | 5 Jun at 6 PM |
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New HM Revenue and Customs rules bring bad news for expats selling UK investment property.
In addition to plans now being instigated to scrap lettings relief, a capital gains tax benefit for expat landlords worth as much as £40,000, the UK tax office is considering a proposal to cut tax relief for those selling a rental home they’ve lived in as their main home. In addition, the 18-month final tax-free period is being reduced to a duration of nine months, meaning expat landlords will be forced to pay nine extra months of capital gains tax.
According to a spokesperson from HMRC, the change is aimed at landlords falsely claiming principle residence relief in order to cut their CGT liability. However, tax experts are concerned the new rule will cause problems for genuine home owners as well as expat buy-to-let landlords who’re experiencing delays in finding buyers for their properties. In both cases, a tax bill conforming to the new law would be issued.
Experts from the Chartered Institute of Taxation are arguing high numbers of everyday homeowners living in less popular areas where properties take time to find buyers will be caught in the CGT tax net after the relief period is shortened. Several are suggesting HMRC should consider a broader-based consultation on the effectiveness and objectives of this particular example of tax relief.
HMRC, they say, should be forced to provide evidence used to evaluate whether a shorter period of nine months would give enough time to find a buyer and complete the transaction for those who’re genuinely moving to a new home. Regional variations in demand as well as property values and differences could make the nine-month period impractical in many areas of the country.
In addition to plans now being instigated to scrap lettings relief, a capital gains tax benefit for expat landlords worth as much as £40,000, the UK tax office is considering a proposal to cut tax relief for those selling a rental home they’ve lived in as their main home. In addition, the 18-month final tax-free period is being reduced to a duration of nine months, meaning expat landlords will be forced to pay nine extra months of capital gains tax.
According to a spokesperson from HMRC, the change is aimed at landlords falsely claiming principle residence relief in order to cut their CGT liability. However, tax experts are concerned the new rule will cause problems for genuine home owners as well as expat buy-to-let landlords who’re experiencing delays in finding buyers for their properties. In both cases, a tax bill conforming to the new law would be issued.
Experts from the Chartered Institute of Taxation are arguing high numbers of everyday homeowners living in less popular areas where properties take time to find buyers will be caught in the CGT tax net after the relief period is shortened. Several are suggesting HMRC should consider a broader-based consultation on the effectiveness and objectives of this particular example of tax relief.
HMRC, they say, should be forced to provide evidence used to evaluate whether a shorter period of nine months would give enough time to find a buyer and complete the transaction for those who’re genuinely moving to a new home. Regional variations in demand as well as property values and differences could make the nine-month period impractical in many areas of the country.
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