The government announced in the Autumn Statement 2013 that capital gains tax (CGT) on UK residential property would be extended to non-residents from April 2015 and a consultation document was published on 28 March 2014.
However, the consultation document included a nasty surprise for UK residents owning more than one main residence, with the proposed loss of being able to elect which property should qualify for principal private residence relief (PPR) from April 2015.
PPR elections enable tax payers to choose which property will qualify as being exempt, in whole or in part, from CGT and, once made, also mean the last 18 months of ownership will be exempt. Once PPR is available, other reliefs such as lettings relief is also available.
The consultation document, which looked at how non UK tax residents should be charged to CGT on UK residential property sought to withdraw the election, not only for non-residents but for residents as well, causing many property owners to panic and being unable to plan until further information was released.
The response to the consultation, issued last week (see CGT and the Disposal of UK Residential Property – Non-Residents) has however confirmed that UK residents disposing of UK residential property should not be affected by the new rules unless they also own non UK residential property.
Further details and guidance are expected in due course.
If you have any concerns over the disposal of residential property, please do get in touch.