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Previously UK Capital Gains Tax (CGT) was only payable by residents. The Finance Act 2015 extended the requirement to non-residents on residential property sales from 6th April 2015. As CGT is a tax chargeable on the profit when you sell, in order to calculate the gain, the property must be valued as at 6th April 2015 (the rebase value) and then deducted from the sale price.
HMRC will only request the rebase value when you sell and many non-residents, (whether using their properties as a pied-a-terre or a rental investment) are not looking to sell in the immediate or foreseeable future. So when is the best time to do the 6th April 15 valuation?
At Elysium Surveyors, specialists in valuing central London property, we would strongly recommend you do it now and here are some reasons why?
1) Knowledge - In early 2015, the London property market was extremely complex. The market had been rapidly rising since mid 2009 and speculators were convinced the ‘bubble’ was about to burst. The government had introduced changes to the Stamp Duty Land Tax (SDLT), making it more costly to buy property at the higher end of the market, and Annual Tax on Enveloped properties (ATED) making it more costly to hold property. With an upcoming election (due one month after the valuation date) and the threat of a Labour government’s ‘Mansion Tax’, the market was extremely unstable.
As tax is levied directly on the property value, it is important to ensure valuation accuracy. Still only months after the valuation date, knowledge of the marketplace, the transactions and the market players is fresh in mind. Instructing a valuation sooner rather than later will ensure the valuation is accurate; delivered fast and can reduce the cost.
2) Time to pay – In the 2015 Autumn Statement, the government announced that from April 2019 the time to pay CGT would be reduced significantly. Currently non-residents have up to 22 months after sale completion to pay the tax. The announcement reduces this period for payment to only 30 days after completion of the sale. Instructing a valuation now will avoid a last minute rush.
3) Empower yourself - Currently there have been many changes in the taxation of UK property, together with the fact that the London property market is now both volatile and liquid. If you are an overseas investor in London, you may be considering a change in strategy or looking for your next investment. Instructing a 6th April 2015 valuation now may empower and facilitate decision-making but will certainly free you of time pressures when you decide to sell.
Elysium Surveyors have many years experience in the central London property market and hold a large database of transactions; therefore providing you with fast and accurate valuations. Contact Elysium Surveyors for more information.