CIOT: Owning a home abroad – Tax charge altered
HM Revenue & Customs (HMRC) have recognised the problem of a benefit in kind tax charge for people buying a property abroad through a company. The Chartered Institute of Taxation (CIOT) welcomes this.
Stephen Coleclough, CIOT Chairman of the Technical Committee, comments: “The draft legislation is helpful in terms of removing this (often unforeseen) tax charge. However, in its current form, it does not solve the problem for everyone. The CIOT believes that conflicts with UK legislation will continue to arise and we hope HMRC will continue to be flexible in such cases and, where necessary, amend UK law to ensure that UK residents are taxed only as intended.”
In a recent submission the CIOT stated that there is generally no UK tax avoidance involved as typically a company is used largely because of local regulatory reasons.
Stephen Coleclough adds: “More and more people are buying property abroad and for many reasons must do so through a company. According to a report last year 800,000 UK residents owned a second home abroad. If they do not purchase it through a company they do not need to pay UK tax. The legislation before the amendment was unfair to those people who had no choice but to make their purchase in this way.”