Daniel Crowther, KPMG Tax Partner, comments on the Autumn Statement 2013's announcement that owners of UK property abroad will face capital gains tax.
"The Chancellor has today reversed a near-50 year old policy: since capital gains tax was introduced in 1965, UK tax rules have encouraged overseas buyers to invest in UK property with the ability to make any gains tax free."
"The same tax break has always allowed long term British expats to sell their old UK homes free of capital gains tax beyond the normal exemption for main residence. The UK is now going to remove residential property from this tax break from 2015, aligning the UK with many other countries."
"This will likely lead to a reduced appetite for top end UK residential property. It is also possible that current overseas and expat owners will look to dispose of property before 2015, which could temper prices and lead to more houses being put up for sale, both of which could help cool the housing market generally."
"Ironically it may also encourage overseas investors to acquire properties being sold within offshore companies once more by swapping capital gains tax for the potentially cheaper alternative tax on ‘enveloped dwellings’ brought in last year."
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