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UK Government confirms position on housing duties for high value residential property
Our clients have been following this news for several months now, ever since the Chancellor first announced the proposed tax changes earlier this year,” explains Vidhur.
By: Benham and Reeves Residential Lettings
“Our clients have been following this news for several months now, ever since the Chancellor first announced the proposed tax changes earlier this year,” explains Vidhur. “We have clients throughout Asia, including Singapore, Hong Kong, Dubai and India and many have been expressing concern about the proposals, with some investors reluctant to invest further in London residential property until the tax changes had been clarified. Naturally, the news that companies with genuine commercial interests in property are exempt, is a very welcome one.”
The Government has stated that Stamp Duty and an annual charge will be introduced on properties valued at over £2m bought by non-natural persons through a corporate structure or ‘envelope’
Any overseas buyer who simply buys high value property through a corporate vehicle for their own use, will have to pay a £15,000 annual charge, called the Annual Residential Property Tax (ARPT), for properties valued at £2m - £5m. There will be a £35,000pa charge for properties between £5m and £10m and a £140,000pa charge for properties worth over £20m.
The Government will be publishing draft legislation in January regarding the extension of Capital Gains Tax (CGT) but there have been some welcome amendments to the original proposals. Firstly, the same reliefs that apply to genuine commercial businesses for ARPT will apply, secondly the definition of non-natural persons will be the same as for ARPT and lastly, only gains accrued after April 5th, 2013, will be chargeable. The Government will be continuing with its new CGT charge of 28% for non-resident, non-natural persons disposing of high value residential property, the same exemptions will apply as for the ARPT.
“The Government’s announcement is a huge relief for overseas investors who own London buy-to-let property,” continues Vidhur. “We believe the Government’s original proposals would have had a detrimental effect on the private rented sector and we welcome the decision to exempt companies with genuine business purposes. Rightly, these amendments now mean ARPT and the extension of CGT will apply only to overseas investors who buy London property for their own use – these were always the Government’s target. It won’t now affect genuine business investment in UK residential property.”
“We’re pleased the Government has listened to feedback and recognised the contribution of the private rented sector towards the UK economy - this should ease concerns amongst overseas investors about the long term future of investment in UK residential property. The move is a clear indicator the Government recognises and encourages the role overseas investors play in the UK economy.”
Established in 1956 in Hampstead, London, and now with ten offices in the prime residential areas of London, (and overseas offices in Dubai, Hong Kong, Mumbai and Singapore), Benham and Reeves Residential Lettings is recognised as one of London’s largest, specialist lettings and property management agencies. To complement this, they also provide an interior design, refurbishment and furnishings service for London rental investment properties to landlords based worldwide.
For more information visit at: http://www.brlets.co.uk