Possible Capital Gains Tax for foreign buyers of UK properties
George Osborne is rumoured to be considering introducing a tax for overseas buyers of UK properties, bringing the UK in line with many other European countries.
Word on the grapevine is the Chancellor may announce the policy in his Autumn Statement, due next month.
Currently, property owners who live in the UK pay Capital Gains Tax (CGT) of either 18% or 28% on sales of any secondary properties they own.
Non-resident owners are currently exempt from the tax – helping fuel a sharp increase in foreign ownership of London properties.
The influx of money from the Middle East, Russia and further afield in Asia has caused property prices in London to rise astronomically in recent years, with the average price rising by over 10% in October alone.
According to estate agency Knight Frank, around 70% of the most expensive newly-built properties in London were bought by non-UK citizens.
Internal research by the Treasury has suggested the tax is unlikely to raise significant sums, however it would help address concerns about UK residents being priced out of the property market.
Osborne’s previous measures to make it easier to get on the property ladder – the ‘Help to Buy’ and ‘Funding for Lending’ schemes – have faced criticism they have increased demand without increasing supply.
Concerns have apparently been raised by those in Whitehall, who fear the measures would undermine the Government’s message of keeping Britain ‘Open for Business’, while others are worried they would undermine the wider UK housing market ahead of the next election.
Some have suggested the measures could eventually be extended to encompass other taxable capital gains so watch this space!