Concrete AnalysisBritish budget tightens taxation of homes held by non-residents
Higher rate of stamp duty tax will be applied to homes people own by way of corporate entities
In tax terms, Britain's budget, released on March 19, was mostly uneventful. However, there were some unexpected announcements for non-residents who own British property.
In addition, more details were given on the proposed extension of capital gains tax to non-residents in the consultation paper published on March 28. The proposals will adversely affect more owners than originally thought.
Since 2012, the British government has been seeking to tax people who own British residential property by way of a company or other "corporate envelope".
The aim was to "tackle tax avoidance and to ensure that those wrapping residential property in corporate and other 'envelopes' and not using them for commercial purposes, such as renting them out, pay a fair share of tax".
The proposals will adversely affect more owners than originally thought
To discourage the use of companies and other "envelopes", first, a higher rate of stamp duty land tax will be charged on purchases by these entities and, second, an annual tax will be levied - the annual tax on enveloped dwellings (ATED). Originally these charges applied only to properties worth more than £2 million (HK$25.71 million) that were held by non-human entities. Now they will apply to properties worth over £500,000.