Page 26 - Layout 1

Tax
UK property ‘levelling the playing field’
By Lynette Chaudhary, International Tax & Research Director, STM Fiscalis Ltd
For UK property investors, changes have been proposed in UK Government consultation documents,
which seek to extend the UK’s grip on the taxation of such property.
These target the taxation position of non- UK resident investors in all UK property, not just residential property, and therefore mark a fundamental change to how UK commercial property, owned by non-UK residents, is to be taxed in the UK.
The rationale has been described as a ‘levelling of the playing field’ in respect of UK resident and non-UK resident investors. Whilst this might be a logical move, many non-UK resident investors are, in practice, unlikely to read UK consultation documents and may be unaware of what lies ahead. This serves to raise awareness of these proposals.
The proposals
l In March 2017, it was announced that from April 2020, non-UK resident companies will be brought within the charge to UK corporation tax (CT) on their UK rental profits (currently liable to UK income tax) and gains on their disposals of UK residential property, currently liable to non-UK resident capital gains tax, (NRCGT).
A consultation has taken place on this and the UK Government plans to publish an explanatory note and draft legislation as a result of this consultation in the summer. l More significantly, in November 2017 it announced that from April 2019, gains made on the disposal of all types of UK immovable property, directly or indirectly held, will be chargeable to UK taxation, regardless of the residency of the investor. This extends the existing rules that apply to UK residential property only, to UK commercial property (currently, non-UK resident investors are not liable to UK tax on UK commercial property gains).
Most property will be rebased from April 2019 so that only gains arising after that date are within the scope of UK taxation.
A consultation document was published in November 2017. The consultation period ended on 16 February 2018 and at the time of writing we wait to receive a summary of the responses and the Government’s reaction to them.
For Gibraltar, these proposals mean that, for the first time, on the disposal of UK commercial property: l Gibraltar resident individuals or trusts will be within the scope of UK capital gains tax (CGT) from April 2019, and l Gibraltar resident companies will be within the scope of UK CT from April 2020 (and within the scope of CGT from April 2019 to April 2020).
Representations have been made to coordinate these start dates, so that they both commence from April 2020. This may have the added advantage of giving more time for the legislative detail to be considered.
Generation 4
OPENING SPRING
2018
120 STYLISH AND COMFORTABLE BEDROOMS Including interconnecting and accessible rooms
ENGLISH AND CONTINENTAL BUFFET BREAKFAST Included in room rates
SUPERB LOCATION BASED AT 21-23 DEVIL’S TOWER ROAD Walking distance to airport, town centre and Ocean Village
FREE WI-FI
And high speed internet access
(+350) 200 67890 info@hiexgibraltar.com
Book your room now at www.hiexpress.com
26
Gibraltar International
www.gibraltarinternational.com
BOOK
NOW