Non-domicile capital gains tax comes into effect
14th Apr 2015
For the first time in Britain, non-domiciled UK residents will be liable for capital gains tax on the sale on their property as a result of a newly implemented tax. The tax, known as the non-domicile capital gains tax, was announced in the 2014 budget, and came into place on April 6th 2015 at the start of the new tax year.
The tax change, which may prompt people of a high-net worth to reconsider their plans for property investment, is expected to quell increasing house prices in London and the South East due. The new tax also means that the UK is in line with other European countries which have similar rules.
Lucy Brennan, a partner at the accountancy firm Saffery Champness, noted that the UK has become “one of the world’s great hotspots for property investment.” She went on to say that potential effects of the tax on house prices could include pouring proverbial cold water on “a very hot and fast-moving market” in regards to the UK’s property market.
Brennan continued to say that the tax may deter people of high-net worth who are considering buying new or another property in the UK, and may result in purchases of property elsewhere.
The new tax will apply to residential properties which are used as, or have the potential to be used as, dwellings. The properties which the tax will apply to are those sold from the price range of £500,000 to £2 million.
However, depending on how well the tax works in practise, rather than theory, the government have added that it may “extend CGT to all UK residential property”, which would include those which are valued at £500,000.