Chancellor has announced today that UK capital gains tax will be levied
As widely anticipated, the Chancellor has announced today that UK capital gains tax will be levied, from 6 April 2015, on gains made by non-UK residents disposing of UK residential property, regardless of value.
This brings the tax treatment of individuals in line with the treatment for non-UK resident corporate entities selling UK sited property of value over £2million after 6 April 2013. It is anticipated that capital gains tax will now be extended to companies and other entities within the scope of the existing charge which sell a UK residential property of any value.
We have very little detail relating to these proposals at this stage and the Government has announced that it will be consulting on the measures with a consultation document then due out by April 2014. Possible areas open for discussion are:
- “re-basing” by charging capital gains tax only on gains relating to the period from April 2015 to the date of sale
- applying the capital gains tax charge only to properties acquired after April 2015 (highly unlikely in our opinion!)
- Currently, the last 36 months period of ownership of a principal private residence is treated as if it were the taxpayer’s main home, regardless of whether he lives there or owns another property.
The Chancellor has announced today that this exemption period is to be halved to just 18 months from 6 April 2014. This could significantly increase some taxpayers’ capital gains tax liabilities if, for example, there is a delay in the sale of the property.