penguinsix

Anyone affected by this proposed change, or just a bunch of hype?

http://www.telegraph.co.uk/expat/exp...oreigners.html

"Thousands of Britons living abroad face being caught up in a tax raid on wealthy foreigners buying and selling property in the UK.

George Osborne, the Chancellor, is preparing to announce that capital gains tax will be charged on British property sold by overseas nationals and expats...

...However, it is understood that Mr Clegg’s plan would also apply to British people living abroad and who are classed as non-residents here, but still own property in the UK."

lansbury

http://www.telegraph.co.uk/expat/exp...oreigners.html

Something to think about in future planning if it comes about.

scrubbedexpat099

The devil may be in the details, quite a few rent out their UK property.

I must have been hitting the Telegraph too often, wants me to pay.

Biggie would be if it is retroactive, could be a lot of property coming on the market!

penguinsix

Clear the cookie.

Oops, did I say that

kins

If you're resident in the US for tax purposes can the UK charge you capital gains tax?

Yorkieabroad

Not sure why making it retroactive would cause a lot of sales.....those properties are already sold. I haven't seen an implementation date, but if they said it was coming in wef say April 5th, then I could see folk trying to get sales completed before that date, as happened in the late 88 with the well signaled abolition of multiple mortgage relief under MIRAS.

Pulaski

Yes, they have the money, so it will be withheld (I assume) at closing. You'll get a credit against any matching US CGT liability, so as long as the CGT rates are higher in the UK than the US, most people in the US selling property in the UK, won't have a US tax liability. I do foresee some complex calculations because there are differences in the method of calculation of the chargeable gain between the UK and the US, especially in relation to indexation and how far back chargeable gains are calculated, so there may be some odd outcomes for people selling property that they have held for several decades, but the discrepancies would have to be fairly extreme to overcome the difference between the CGT tax rates.

scrubbedexpat099

Does it apply to future capital gains after the inception date? If it includes Capital Gains before the inception date it would be retrospective.

Yorkieabroad

Is that how it would work? So the conveyancing solicitor would become responsible for holding the funds and paying to the UK inland revenue? I guess that would make it similar to the withholding that estate agents have to do for rental income, if the exemption hasn't been filed. That's getting complicated, particularly for someone doing multiple transactions in a tax period. I'd not really thought about the mechanics, but just assumed it would be rolled into your annual tax return, which is how I did mine before I became non resident for tax purposes. Admittedly, if they do it that way it becomes harder to chase delinquencies from overseas residents.

Yorkieabroad

Sorry, misunderstood what you meant by retroactive.......I thought you meant they would be going back over past completions and trying to retroactively charge tax.

If they implement it, I would have thought it would have to be gain from original purchase, no? Otherwise how are they going to set a basis for the property value at date of inception?

scrubbedexpat099

You have a valuation from whenever the tax date applies. Happens in plenty of other situations.

Yorkieabroad

Like what?

Steve_

Er... how is it not already the case that non-residents don't get charged UK capital gains tax on UK property? That's bonkers.

Usually how it works is that you get charged capital gains tax in both jurisdictions and then make a tax treaty claim for relief, so does the UK have tax treaties that would cover that scenario?

Essentially all they would be doing is repatriating the capital gains tax collected by overseas tax authorities, although it has to be said 28% is a pretty high CGT so people would pay a bit more I guess in general.

I'm totally astonished they weren't already doing this, the US and Canada have been doing it for ages (although the rate in the US was zero for quite a long time, but that was for everyone).

Pulaski

Yes, agreed. I assume it would be on all future sales and based on all (including prior to this change) purchases/ acquisitions, otherwise it would take years to start realising much in the way of tax revenue, and decades to be fully effective.
Me too.

Sally Redux

Yes, I thought they already did.