Property experts are warning of the damage Chancellor George Osborne could inflict on the UK economy and property market if he hits wealthy foreign owners with new taxes.
The Chancellor is said to be considering charging wealthy foreign residents who own UK property capital gains tax when they sell, with the change to be announced in today's Autumn Statement.
Peter Rollings, chief executive of estate agent Marsh & Parsons, warned the move could backfire by cutting inward investment to the UK.
"It would also create uncertainty by adding to the ever-increasing tax burden that overseas buyers experience in London."
He said charging overseas property owners in hand CGT "smacks of political point scoring" and is unlikely to generate much revenue for the government."
There may be one bright side. "If the change is delayed to the next tax year, we may find that those who were thinking of selling rush to put their property on the market to sell tax-free before April, thus helping to boost supply and fluidity at the highest level," Rollings said.
Tax experts at international law firm Berwin Leighton Paisner warned that discriminating against non-UK residents would deter long term investment into the UK.
Partner Damian Bloom said: “Media headlines increasingly backed up by ministerial quotes suggest CGT on non-UK resident owners of UK real estate may be on the agenda. However, we believe the policy could be misguided and badly timed.
“We hope – perhaps in vain – that the Government does not allow tax policy to be dictated by media pressure and political agendas. The UK property market and tax regime should not become a pre-election football."
Bloom said the UK property market is still dealing with the consequences of significant changes introduced in April 2013. "Another attack so soon afterwards will be damaging to our already-impaired international reputation for stability.
"A home in the UK is often the first step taken by wealthy foreign individuals considering making greater investment into this country. British entrepreneurs and businesses will be the losers if wealthy foreign investors take their money elsewhere.”
The Chancellor has also faced a series of calls to scrap stamp duty for cheaper properties, including the Stamp Out Stamp Duty campaign by the TaxPayers' Alliance (TPA).
TPA chief executive Matthew Sinclair said: "Stamp duty is an unfair double tax that distorts the property market and prevents people from moving home."
The TPA has proposed ways to cut stamp duty without significantly impacting Treasury revenues, including changing the tax from a slab rate to a marginal rate tax similar to income tax.
The Chancellor delivers his statement to the House of Commons from 11.15am.
Comments