Taxation

It is often said that in this world nothing can be said to be certain, except death and taxes. What is also certain is the government’s tax regime is and will constantly evolve. Peter Barry under take valuations for numerous taxation purposes. Below are two of the most common types:

Captial Gains Tax for Non-Residents

Over the last couple of weeks we’ve begun to receive calls from overseas investors or their agents concerned about the change to Capital Gains Tax which is due to come in to force on 6th April this year.

Announced during his 2013 Autumn Statement, George Osborne, the then UK Chancellor of the Exchequer said “It is not right that those who live in this country pay Capital Gains Tax when they sell a home that is not their main residence, but those who don’t live here do not … so from April 2015 we will introduce Capital Gains Tax on future gains made by non-residents who sell residential property here in the UK.” The change will not be applied retrospectively so the tax will only be paid on gains accrued on or after the introduction date.

The charge apply to gains made by individuals, trustees and closely held non-resident companies (i.e. a company that has a small group of controlling shareholders) and funds (to the extent that such gains are not caught by the ATED charge). The rates for individuals will be either 18% or 28% according to their status as basic or higher/additional rate taxpayers respectively. The rate for trustees will be 28%.

When it comes to calculating gains the taxpayer will have the option to either re-value their property as at 6th April 2015 or time aportion the gain i.e. if a property was owned for 3 years prior to the rule change and for 3 years afterwards half of any capital gain could be apportioned to the later period.

Given the amount of time that has passed, this type of valuation would now be classified as retrospective. This should not prove a problem for the valuer, but additional information and/or assumptions may be needed in order to value at the 2015 date.

Annual Tax on Enveloped Dwellings  (ATED) Valuations

The Annual Tax on Enveloped Dwellings (ATED) applies to companies that own residential property in the UK. The charge is levied annually, and depends upon the value of the property at the relevant valuation date. The valuation date 1st April 2012 for properties acquired before that date. For properties acquired after 1st April 2012 the valuation date is the date of acquisition.

The ATED year runs 1st April to 31st March and companies need to file an return by 30 April for each ATED year they hold a UK located residential property.

All company owned residential property worth over £500,000 will need to be revalued on 1st April 2018 and, depending on its value at that date, will be re-banded accordingly in the following financial year. It is important that owners submit accurate figures to the HMRC in order to avoid being charged penalties and late payment interest.

Our team of Chartered Surveyors provide ATED valuations throughout London. Our ATED valuations are prepared in accordance Part III of the Finance Act 2013 and the RICS Valuation – Professional Standards 2014 (the Red Book). As such they can be relied upon as a sound basis on which to submit your annual return, and ought to stand up to any scrutiny by HMRC or the District Valuer.

Our surveyors have a up to date and relevant understanding of property taxation where it relates to valuation work. Please either email us or call 020 7183 2578.

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