Government CGT plans target overseas investors in UK property

Government plans to introduce a new capital gains charge on UK properties sold by non-residents could add to the costs and admin of residential property sales by overseas investors, says the Chartered Institute of Taxation (CIOT). The Institute has called upon the Government to avoid creating a more complex capital gains system as a means of extending the charge, saying the Government is being presented with an opportunity to simplify the system and should refrain from further complication.

The Government is planning to redesign the capital gains tax (CGT) regime to address the current imbalance between the treatment of UK and non-UK residents selling property here in the UK. It aims to achieve a difficult balancing act between fairness, simplicity and a sustainable regime not open to abuse.

Commenting, Patrick Stevens, CIOT Tax Policy Director said:

“The Government are eager to ensure that the tax treatment of non-residents that own and make gains on UK residential property is comparable to that of UK residents. This is understandable as the UK is unusual in not charging non-residents CGT. Similarly understandable is the Government’s wish to create a regime not at risk of abuse. However the way they are proposing to do this adds unnecessary complication to the tax system.

“The Government’s proposals will overlap with current CGT rules on the selling of UK residential properties, complicating the existing CGT system further. This will be burdensome for those caught by the new charge, mainly non- resident individuals buying for their own use or smaller investors.

“The regime governing the taxation of non-residents selling UK residential property could be simpler if the new CGT charge captured all such gains and took precedence over existing rules, thereby allowing the Government to remove more complicated elements of the existing parallel regimes.

“In the longer run if the Government really wants to achieve its objectives, the way residential property is taxed in the UK should be looked at holistically rather than these piecemeal changes.”



Notes to editors:

1.       The ‘Implementing a capital gains tax charge on non-residents: consultation’ closed on 20 June. The consultation document is can be accessed here.

2.       The CIOT’s response can be accessed here.

3.       The Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries.  The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Matthew Oliver
External Relations Officer

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