Offshore Investors – Ready for UK CGT?

Horses 1 copped small MorgueFileOffshore Investors – Are you ready for UK Capital Gains Tax on your UK property

CHANGES to Capital Gains Tax for UK property investors based overseas were first announced by George Osborne last year and now here we are, just a few weeks’ away from the new legislation being introduced.

These changes will mean that Offshore Investors in UK property will be liable to UK capital gains tax (CGT) on any rise in value between 6 April 2015 and the date on which you sell that property, once annual CGT exemptions have been deducted (currently £11,000 per person).

So what action can an offshore investor take to manage the situation effectively going forward?

  1. As gains start on 6 April, I advise that an offshore investor obtains a valuation from a RICS Registered Valuer on each owned property as soon as possible after April 6. As this will be a valuation obtained at the outset of the new regime, any increase in value can be easily calculated from that date forward.  Without an accurate valuation in place, you’ll be required to seek a retrospective valuation on your property at such point as you come to sell it in the future – which will naturally be subject to closer scrutiny and analysis by HMRC.   HMRC have confirmed in recent weeks that they will honour such a valuation when calculating any capital gains made in the future.
  2. If you have plans to come to the UK to live full time at some stage, you may wish to take advantage of the Principal Private Residence relief (PPR). Changes are afoot here too, and moving to qualify for PPR relief, the owner of a UK property only needs to show that they have spent at least 90 days in the property for each year when they are not UK resident.  These 90 days can be split between husband and wife if the property is jointly owned although, of course, this will prevent the property from being rented out other than for short periods.

For more advice on the tax implications of investing in UK property generally, contact Sharron Fletcher on 07587 709008 of RAE Business & Property.

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