GETTING TO GRIPS WITH UK TAX CHANGES AND THEIR IMPACT ON THE PROPERTY MARKET

With the property investment landscape ever changing – and UK government tax proposals having a significant impact on non-UK residents, it’s vital to secure the right advice. Standard Chartered Bank explain further

The UK Government recently announced proposals to extend capital gains tax to the disposal of commercial property by non-UK residents from 6 April 2019. This means that disposals of all UK commercial and residential property held directly or indirectly by non-UK residents will be subject to UK capital gains tax.

With recent changes and market disruptions over the last few years, the property investment landscape isn’t just complicated, it’s also in a permanent state of flux.

Penny Wotton, Partner and Head of Private Client at Fieldfisher, outlines what the main implications might be for property investors”

• Identify your objectives, seek legal advice before purchasing decisions are made and keep it simple.
• The cost of unwinding poorly considered structures often outweighs that of seeking professional guidance in order to get it right first time.
• Core considerations include :
  • Whether to purchase directly or to use a corporate structure. Pros and cons exist for either means of purchasing but the decision is likely to be determined by your investment objectives and driven by tax considerations.
  • Think of succession planning before you buy. Inheritance tax at the rate of up to 40% can heavily impact on those inheriting your assets and it may be possible to avoid this liability by careful structuring. Forward planning is key.
  • Life Insurance. A little extra expenditure for life cover to meet potential future inheritance tax liabilities can provide peace of mind.
  • Borrowing still provides a good inheritance tax planning solution if properly structured. For example, care should be taken before giving security over foreign assets, as the value of these foreign assets may now be exposed to UK inheritance tax following a recent tax change.

• Existing property holders should seek advice on the structuring of their current holdings and also obtain advice on their UK residence status as their ties to the UK may cause them to qualify as a UK resident for UK tax purposes even if they do not spend much time in the UK.

 THE TAKE HOME

Seek proper professional guidance on the structuring of your property purchase to take account of tax and succession planning considerations. Planning to achieve the best outcomes also requires flexibility from your chosen mortgage provider, whereby each application needs to be reviewed on a case-by-case basis and solutions provided to fit your needs.

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Disclaimer

Standard Chartered Bank does not provide tax advice. Tax advice should be sought from a regulated tax adviser.