HMRC has released proposals for implementing new Capital Gains Tax rules which will crack down on UK residents electing second homes as their main residence as well as targetting non-UK residents buying in this country.
HMRC has now confirmed the new non-resident CGT will be realised only on profit made on divestment after next spring; gains made before April 2015 will be ring-fenced.
There are a number of different rates: 18 per cent of the gain for lower rate tax payers, 20 per cent if the property is rented and held in a corporate wrapper and 28 per cent for higher rate tax payers.
Non-residents will obtain private residence relief from CGT if they meet the ’90 day rule’ - that is, where the property is used as a main residence for more than 90 days. This rule will now be applied to UK second home owners as well.
Agents are still calculating what effect this may have on second homes owned and purchased by UK residents, but central London analysts say the measures which apply to non-residents will probably not hit the capital’s high-value market.
“It’s to be expected that prime central London growth will taper off in the short term, given the high growth levels already seen and the traditional market jitters before any general election when transactions can fall as much as 15 per cent” says Naomi Heaton, chief executive of London Central Portfolio, a property consultancy.
“There’s no evidence that the long term fundamentals for growth will not remain in place and the new non-resident CGT in 2015 will not have an impact” she says.
By Graham Norwood. 03 Dec 2014 www.estateagenttoday.co.uk