Wealthy Hong Kong residents who own property in Britain could be facing a hefty tax slug if a new law is passed.
Changes to British property taxation rules, announced in the March budget, will hit those who have established companies to buy residential property worth more than GBP2 million (HK$24.2 million).
Any Asian or expatriate in Asia who owns a British residential property worth more than GBP2 million via a company, such as a British Virgin Islands (BVI) company, could be affected by these rules. A BVI is a regularly used byword for an offshore company.
The British government believes not everyone is paying their fair share of tax on residential property and the change in the treatment of high-value residential property, particularly that owned by a 'non-natural person' - a term for individuals buying property not in their own name - has been proposed. This targets those who are avoiding paying stamp duty by using companies to buy expensive residential properties.
The new taxes will apply at three stages: on a purchase; during the period of ownership; and on a sale. These taxes are currently restricted to purchases of properties worth more than GBP2 million.
British government estimates put the number and value of residential properties in Britain registered as a 'non-natural person' property at about 5,000 homes, worth about GBP25 billion. The total value transferred in 2011 was GBP1.6 billion - about 500 homes. These figures include properties owned by both Britain-domiciled and non-residents.
