GEORGE Osborne is considering a tax raid on overseas investors who own British property, it was reported yesterday, in an attempt to raise millions of pounds.
The plan would require non-UK-based real estate owners to pay capital gains tax (CGT) on British property, according to Sky News. At the moment only UK residents pay the tax to HMRC.
Many foreign buyers – such as the French – already pay CGT to their own governments, but purchasers from some countries in the Middle East and elsewhere enjoy no or very low CGT charges.
Under the new rules, everyone would have to pay at least 28 per cent – the rate of CGT set in the UK.
The Treasury said the report was speculative but did not issue an outright denial. Officials also drew parallels with Osborne’s previous decision to crack down on stamp duty evasion by international buyers.
Overseas investors continue to rush into the central London property market and Liz Peace, chief executive of the British Property Federation, warned any curb on this would damage the UK’s reputation as a place to do business.
“House prices are rising due to a chronic shortage of new homes, not because of foreign investors, and until this supply issue is dealt with it makes no sense to slap kneejerk taxes on people who want to spend money in the UK,” she said.
Lawyers yesterday said that attempts to extract CGT from individuals based overseas could prove to be difficult.