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UK expat property investors to lose capital gains exemptions
| Published: | 17 Jun at 6 PM |
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Following the UK Chancellor’s budget announcement that UK expats should expect increased property taxes on UK buy-to-let investments, capital gains tax will now apply to all expat-owned investment property and second homes.
UK citizens living overseas will now be required to pay capital gains tax (CGT) on all sales of buy-to-let houses and shared homes used as bedsits or student lets. Rates will be the same as those charged to UK residents, set at 28 per cent for higher-rate taxpayers and 18 per cent for basic rate taxpayers.
Principle private residence relief (PPR), will still apply to residences belonging to expats working and living overseas, but HMRC will now take over the election of owners’ main residences. The move is aimed at tax avoidance by expats overseas previously able to choose their UK property as their main residence, thus eliminating CGT payments.
The changes will be brought in on 15 April next year, and will include a new withholding tax similar to Stamp Duty, applying to the sale of properties. Expat investors holding UK properties as part of a limited company will also be subject to new anti-tax avoidance rules, including 15 per cent stamp duty on homes valued at more than £500,000.
In addition, tax on offshore company-owned ‘enveloped dwellings’ (ATED) will be paid annually on a sliding scale related to property values. CGT at 28 per cent will also be due on the sale of overseas company-owned property.
UK citizens living overseas will now be required to pay capital gains tax (CGT) on all sales of buy-to-let houses and shared homes used as bedsits or student lets. Rates will be the same as those charged to UK residents, set at 28 per cent for higher-rate taxpayers and 18 per cent for basic rate taxpayers.
Principle private residence relief (PPR), will still apply to residences belonging to expats working and living overseas, but HMRC will now take over the election of owners’ main residences. The move is aimed at tax avoidance by expats overseas previously able to choose their UK property as their main residence, thus eliminating CGT payments.
The changes will be brought in on 15 April next year, and will include a new withholding tax similar to Stamp Duty, applying to the sale of properties. Expat investors holding UK properties as part of a limited company will also be subject to new anti-tax avoidance rules, including 15 per cent stamp duty on homes valued at more than £500,000.
In addition, tax on offshore company-owned ‘enveloped dwellings’ (ATED) will be paid annually on a sliding scale related to property values. CGT at 28 per cent will also be due on the sale of overseas company-owned property.
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