Birmingham ex-pats could face large tax bills when they sell a UK property if predictions for next week’s Autumn Statement are correct.
Philip Harrison, a partner at Warwickshire estate and tax planning solicitors Meridian Private Client, said there is a possibility that the economic update on December 6 will include an announcement that wealthy foreigners will pay capital gains tax (CGT) on the sale of any property owned in the UK.
The rumours are tied up with the Coalition’s aim to make foreigners pay the same property taxes as UK residents while taking the steam out of the house price inflation added to by overseas buyers investing in residential property mainly in London.
British property owners have to pay CGT when they sell a property that is not their main residence but wealthy non-resident buyers escape this tax completely.
“British expatriates are likely to be caught up by this change, effectively as an unintended consequence,” he said.
“Rising property prices will mean more CGT if the new rules are introduced and the change could have a particularly undesirable retrospective effect if the property is already owned.
“A change in the law could be costly for British people including those who go overseas to live when they retire or who go abroad to work while retaining property in the UK.
“Establishing that their UK property was their main residence for CGT purposes would sometimes be an option even for a non-resident, but not in respect of a tenanted property.”