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Although the Chancellor, Philip Hammond’s 2017 Budget speech was most notable in the context of UK property ownership for its reform to the SDLT rules for first time buyers at the lower end of the property market, as with any Budget the devil is in the detail and this Budget is no exception.

Buried in the executive summary of the Budget is the following government proposal which, if implemented will have significant implications for all non-resident owners of property in the UK, both residential, and more notably, commercial property:

‘To align the UK with other countries and remove an advantage which non-residents have over UK residents, all gains on non-resident disposals of UK property will be brought within the scope of UK tax. This will apply to gains accrued on or after April 2019. The Government intends to include targeted exemptions for institutional investors such as pension funds.’

Alongside this proposal the government has published a consultation document which is open to 16 February 2018. We will be considering the detail of the government’s consultation document in the coming days and would welcome comments from our readers but in the meantime here are our initial observations:

  • the proposal extends the liability of non-residents owning UK residential property either directly or indirectly via offshore companies beyond the current scope of non-resident capital gains tax and ATED-related capital gains tax to all gains which accrue after April 2019; and
  • the proposal goes wider than residential property and will bring gains made by non-residents disposing of UK commercial property within the scope of CGT where before the disposal of such property was outside the scope of UK taxation and made investment in this sector very appealing for many offshore investors.

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