Expat CGT On UK Property Sales Finalised

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The final details of government plans to charge non-residents capital gains tax on property disposals have been released.

From April 6, 2015, anyone living abroad selling a residential property or land on which a home once stood in the UK will have to pay any capital gains tax (CGT) due within 30 days unless they already file a self-assessment return.

Sellers covers individuals and companies controlled by five or less people.

“The measure is aimed at making the tax system fairer by bringing what expats pay when they sell a home in the UK with what taxpayers living here have to pay,” said a government spokesman.

The next Finance Bill will amend CGT rules for expats.

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CGT rules changes

The main points are:

  • Expats can ask for private residence relief to reduce their tax bills if they have lived in the home they are selling at some time, but they cannot claim the relief unless they have spent ’90 midnights’ in the property during the course of a tax year.
  • Property includes interest in land that has included a property in the past
  • Purpose-built student accommodation not linked to an education institution is exempt from the definition of a home
  • CGT will be due 30 days after the disposal completes unless the taxpayer already files a self-assessment return in the UK – such as someone belonging to the non-resident landlord scheme

The government expects to raise £70 million in CGT over the next three tax years.

HM Revenue & Customs (HMRC) estimates around 4,000 home disposals a year are affected by the new CGT rules.

However, monitoring and collecting the tax will cost HMRC £3.2 million.

No tax on shares

“The change in the law will not be significant. Most people already pay capital gains tax in the country where they live,” said the spokesman. “The move merely changes the balance of taxing rights and brings the UK into line with most other countries.”

CGT-free transfers between spouses remain unaffected by the rule change.

Chancellor George Osborne will confirm the CGT rates expats will pay in Budget 2015 on March 18.

The rules apply to former homes; buy to lets, holiday lets and houses in multiple occupation (HMO) in the UK.

Although CGT will be due on property disposals, expats do not have to pay tax on the disposal of assets, such as stocks and shares under the new rules.

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