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Old 12.04.2014, 20:13
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Proposed Capital Gains Tax on UK property for expats

This is an ugly business that is brewing in the UK and could be in force by April 2015.

https://www.gov.uk/government/consul...-non-residents

Essentially the Chancellor wants your money. At present it looks as if this may also apply to UK residents too who try to flip property when they own 2 homes and sell one. Apparently even rented property could be classed as a 'primary residence' next year.

If you have a house or falt in the UK, it might be time to think of selling...
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Old 12.04.2014, 20:27
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Re: Proposed Capital Gains Tax on UK property for expats

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This is an ugly business that is brewing in the UK and could be in force by April 2015.

https://www.gov.uk/government/consul...-non-residents

Essentially the Chancellor wants your money. At present it looks as if this may also apply to UK residents too who try to flip property when they own 2 homes and sell one. Apparently even rented property could be classed as a 'primary residence' next year.

If you have a house or falt in the UK, it might be time to think of selling...
It's only future capital gains, so rather lame at best. No reason to sell unless you think the capital gains will be less in 5/10 years time which is of course a real possibility as interest rates return to normal rates I.e. 5-10% over that period.

Quite why investment properties owned by non residents should be taxed less than investment properties owned by UK residents is curious. It's also a reason that London house prices have got out of control, perhaps LVT will fix the problem.

Edit,

There are errors in the French CGT shown in the link, CGT is now on the first 22 years of ownership however social charges payable for the first 30 years of ownership for a non principle residence.

Last edited by fatmanfilms; 12.04.2014 at 20:42.
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Old 13.04.2014, 00:29
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Re: Proposed Capital Gains Tax on UK property for expats

Thanks for that - I had started looking for the consultation document. This whole area is getting more complicated I think. The annual charges (ATED) on company owned property are being extended year-on-year (unlucky anyone who avoided stamp duty this way), could see how it's tempting to apply this to non-resident owners too. Punitive levels of council tax on empty or second properties are an option too, this has just been enabled in law in Wales.

On this particular issue I think that arguing too hard that a property is a principle residence could also become entangled with your non-residence status under the new rues that govern that. However, if you let your property, despite the fact that house price growth is expected to continue on the same track, amassing substantial capital gains, lettings relief is quite a substantial discount too.

Is anyone clear on what the DTA between UK and Switzerland currently says about CGT - can that influence the UK's ability to levy CGT on those resident in CH?
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Old 13.04.2014, 00:33
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Re: Proposed Capital Gains Tax on UK property for expats

So they are trying to finally get it right! Non residents disposing of property should be taxed at higher rates than residents.

Perfectly legitimate that CGT should be applied regardless of residency if they get it roight then non residents should be charged a higher rate
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Old 13.04.2014, 00:38
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Re: Proposed Capital Gains Tax on UK property for expats

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So they are trying to finally get it right! Non residents disposing of property should be taxed at higher rates than residents.

Perfectly legitimate that CGT should be applied regardless of residency if they get it roight then non residents should be charged a higher rate
...and pay taxes that they will not benefit from??
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Old 13.04.2014, 00:44
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Re: Proposed Capital Gains Tax on UK property for expats

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...and pay taxes that they will not benefit from??
So why should they get a free ride at the expense of the rest of the country. If they want to invest there then they should damn well pay for the priviledge!
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Old 13.04.2014, 06:05
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Re: Proposed Capital Gains Tax on UK property for expats

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Thanks for that - I had started looking for the consultation document. This whole area is getting more complicated I think. The annual charges (ATED) on company owned property are being extended year-on-year (unlucky anyone who avoided stamp duty this way), could see how it's tempting to apply this to non-resident owners too. Punitive levels of council tax on empty or second properties are an option too, this has just been enabled in law in Wales.

On this particular issue I think that arguing too hard that a property is a principle residence could also become entangled with your non-residence status under the new rues that govern that. However, if you let your property, despite the fact that house price growth is expected to continue on the same track, amassing substantial capital gains, lettings relief is quite a substantial discount too.

Is anyone clear on what the DTA between UK and Switzerland currently says about CGT - can that influence the UK's ability to levy CGT on those resident in CH?
Punitive levels of council tax have already been introduced in some councils in England from April 2014. I had a discussion only last week with our local revenue manager(Oxfordshire) in that department and he was telling me that councils are to be fined if they have empty property so effectively forcing them to pass on punitive charges to owners. So, instead of a Council Tax charge of 2k they will charge 150% - an extra 1k. Fair enough when property has been bought for the sole purpose of investment. A bit annoying when a property that is just your main residence is not rentable until works are carried out!
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Old 13.04.2014, 09:16
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Re: Proposed Capital Gains Tax on UK property for expats

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So why should they get a free ride at the expense of the rest of the country. If they want to invest there then they should damn well pay for the priviledge!
The rest of the country gets a free ride! Anyway, it's often not like that. In my case, despite trying desperately to sell our house in the UK in the early 90s while living in Switzerland, we couldn't. Only 6 years later and a substantial drop in both price and pound moved the property.

Until our move here, it was our prime and only residence. If we sold it while still in the UK, all would be fine. But this proposed legislation would potentially add tax to any profit realised - and don't mention council tax...
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Old 13.04.2014, 10:29
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Re: Proposed Capital Gains Tax on UK property for expats

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The rest of the country gets a free ride! Anyway, it's often not like that. In my case, despite trying desperately to sell our house in the UK in the early 90s while living in Switzerland, we couldn't. Only 6 years later and a substantial drop in both price and pound moved the property.

Until our move here, it was our prime and only residence. If we sold it while still in the UK, all would be fine. But this proposed legislation would potentially add tax to any profit realised - and don't mention council tax...
what is also not clear is how the line wiill be drawn in April 2015. So the legislation suggests any profit made from that point on would be liable to CGT. However how will they value the house at April 2015, some mass census of anyone living abroad ? How would you cater for people who left in 2016 and sold in 2019 unless part of going abroad then starts to include a mandatory house valuation! I dont see how it will work.
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Old 13.04.2014, 11:26
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Re: Proposed Capital Gains Tax on UK property for expats

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what is also not clear is how the line wiill be drawn in April 2015. So the legislation suggests any profit made from that point on would be liable to CGT. However how will they value the house at April 2015, some mass census of anyone living abroad ? How would you cater for people who left in 2016 and sold in 2019 unless part of going abroad then starts to include a mandatory house valuation! I dont see how it will work.
It's very easy to assess market value on a house on any particular day in the UK, it's a fairly liquid market with plenty of auction sales. If a house does not sell in a couple of months, the price is higher than market value, we see the same all the time with cars on EF.
Good chance anyone leaving in 2016 & selling in 2019 will have a substantial capital loss...........which can be used in the future against any future UK capital gains. If they make a further profit then they may have some tax to pay from 2016, or more likely they will get (3?) Years to sell after moving like residents do.
Big question is with IHT & the next generation not being able to afford properties in their own right, at some point values & earnings will come back to the historical average.
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Old 13.04.2014, 12:03
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Re: Proposed Capital Gains Tax on UK property for expats

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or more likely they will get (3?) Years to sell after moving like residents do..
This is now going to be 18 months, for residents and non-residents.

In general it's definitely time to think through your strategy on UK property. For example, if you have more than one property, trading up to a single, more valuable one. If you want to be able to afford to live where you want in the UK in future I think you really need to be in the game now.

Remember on CGT in general you can crystallise your gains by selling before any new unfavourable CGT rule or change of residence status comes in and then buying a similar asset back the next day. Works better with shares than property, but worth considering if you have multiple properties. Important to plan for if you expect to become UK resident at some point again in the future, or if the rules do change.
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Old 13.04.2014, 15:11
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Re: Proposed Capital Gains Tax on UK property for expats

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This is now going to be 18 months, for residents and non-residents.

In general it's definitely time to think through your strategy on UK property. For example, if you have more than one property, trading up to a single, more valuable one. If you want to be able to afford to live where you want in the UK in future I think you really need to be in the game now.

Remember on CGT in general you can crystallise your gains by selling before any new unfavourable CGT rule or change of residence status comes in and then buying a similar asset back the next day. Works better with shares than property, but worth considering if you have multiple properties. Important to plan for if you expect to become UK resident at some point again in the future, or if the rules do change.
Buying and selling would mean paying stampduty again. Would you need to put a different name on the title (eg from joint to individual or a company)? What are other non-residents with UK property doing?
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Old 13.04.2014, 15:27
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Re: Proposed Capital Gains Tax on UK property for expats

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Buying and selling would mean paying stampduty again. Would you need to put a different name on the title (eg from joint to individual or a company)? What are other non-residents with UK property doing?

CGT remains a voluntary tax, don't sell & you will never pay any. If you like investment in property do nothing.
When the baby boomers start dying, the electorate will not favour beneficial taxation on home owners, it's only a matter that UK property will become out if favour as it was 60 years ago.
If rent controls or exchange controls ever returned just think of the consequence.
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Old 01.06.2014, 19:39
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Re: Proposed Capital Gains Tax on UK property for expats

While trying to keep on topic, I know that non-res don't have to pay CGT on their property if they stay outside of UK on a permanent basis for 5 years, but is that 5 UK tax years or the day one left UK?

I left UK on 2nd Feb 2010, so does that mean I need to wait until 6th April 2015 (beginning of new tax year) for CGT not to apply?

I already sold my principle property in UK and that's not liable to CGT but I have another property that's not under my name on the deed but it is under my ownership as an informal trust, but want to get the CGT absolutely right just in case I'm on the hook as the gains are quite huge and will get a huge tax bill.

Alternatively, I've heard of flipping properties and now I only have one property, so maybe I can flip this property.
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Old 01.06.2014, 21:22
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Proposed Capital Gains Tax on UK property for expats

Edit sorry I misread you post on my iPhone so disregard my comment

I was talking about exchange controls, the situation where you could not take more than £600 out if the UK without special permission from the Bank of England. This was the situation until it was overturned in Mrs Thatchers first parliament when Geoffrey Howe was chancellor of the exchequer .
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Old 01.06.2014, 22:25
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Re: Proposed Capital Gains Tax on UK property for expats

So I left the UK in September 2013 and have a property in the UK that was my main house and where we lived since 2003.
Member of my wife's family is house sitting at the moment.
We plan to return to uk in September 2016 and live in the same house again.
Will then plan to sell in say 2018 and move.

Will I be liable to CGT on gains in the property value from April 2015 to September 2016 (period from when tax starts and when we return to UK) ?
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Old 01.06.2014, 22:53
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Re: Proposed Capital Gains Tax on UK property for expats

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So I left the UK in September 2013 and have a property in the UK that was my main house and where we lived since 2003.
Member of my wife's family is house sitting at the moment.
We plan to return to uk in September 2016 and live in the same house again.
Will then plan to sell in say 2018 and move.

Will I be liable to CGT on gains in the property value from April 2015 to September 2016 (period from when tax starts and when we return to UK) ?
As you have not been out of the UK for 5 tax years you will still be liable to any UK capital gains made for the entire period, not just from April 2015. The rules have not yet been written, however you should live for a full tax year in the property again before selling in any case. The rules can get quite complicated & you can certainly sell a property later after moving out, it was 3 years, I believe that window has been shortened.
It's quite likely that interest rates will rise substantially before 2018 so there is a reasonable chance that the UK house price bubble will burst & you will not have to worry about any CGT liability.
Until the rules have been written & become law, it's impossible to know the implications so far ahead.
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Old 01.06.2014, 22:59
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Re: Proposed Capital Gains Tax on UK property for expats

I think it's going to be complex for them to enforce.
At the end of the day, if faced with a large CGT tax bill, you would simply sit on the property and not sell it. No sale ...no Gain ...

Thanks for the answer...They have lots to still iron out it seems.
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Old 01.06.2014, 23:28
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Re: Proposed Capital Gains Tax on UK property for expats

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I think it's going to be complex for them to enforce.
At the end of the day, if faced with a large CGT tax bill, you would simply sit on the property and not sell it. No sale ...no Gain ...

Thanks for the answer...They have lots to still iron out it seems.
Problem being UK tax is self assessment, nothing to enforce. If they investigate you have to pay a fine, the tax & a penalty 100% of the tax plus interest. So the tax bill can exceed the gain.

I took professional advise on a tax matter 9 months ago, in the meantime the rules changed so planning in advance can be tricky at best.
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Old 02.06.2014, 11:02
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Re: Proposed Capital Gains Tax on UK property for expats

If you have lived in the house as your primary residence at any time you will be exempt CGT on the last 3 years (although this may be reducing to 18 months). Also, if you let it you accrue additional relief.
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