We are urging our non-resident landlords (those who live and work abroad) to get their UK properties valued now, even if they have no intention of selling. This is to prevent you potentially paying too much tax when you do eventually sell.
Eaton-Terry Clark are not qualified to provide financial advice and always suggest you speak with your own financial/tax advisor, however changes to Capital Gains Tax in 2015 have important implications.
Until April 5, non-UK residents could potentially dispose of UK assets without incurring a capital gains tax liability. However, from April 6, capital gains tax liability can arise on non-UK residents who dispose of UK residential property, but the gains will be ONLY applicable to gains accruing after April 6 2015.
For example – a UK residential property purchased in 2000 by a non-UK resident for £100,000 is valued at April 6, 2015, at £250,000 and it is sold in June 2015 for £265,000.
For a UK resident selling a buy-to-let property the gain arising would be calculated as the difference between the sale proceeds of £265,000 and the original cost of £100,000.
However, under the new rule introduced for non-UK residents, the gain will be the difference between the sale proceeds and the value of the property as at April 6, 2015 (in the above example £15,000).
If non-UK resident property owners do not get a valuation now, then an alternative would be to apportion the total gain over the whole period of ownership, but this could result in a hefty tax bill. A non-UK resident could try to obtain a retrospective valuation, but this will be complex, time-consuming and costly.
It is likely that HMRC will penalise non-resident landlords who do not make a disclosure when they sell a UK property – even when there is no tax due. There are rules for how and when you need to notify HMRC if you sell a property – so please check with your financial/tax advisor.