Property investors and tax

Posted by admin - August 31, 2016 10:01 am Property investors potentially hit by tax rises

Income Tax -v- Capital Gains Tax (CGT)

With effect from 5 July 2016, gains from selling UK property may be subject to Income Tax at up to 45% rather than Capital Gains Tax. This follows a change which was made to the Finance Bill 2016 during the committee stages in July 2016.

When will income Tax apply?

As it stands, profit from UK property sales made on or after 5 July 2016 will be taxed as trading income if the following conditions apply:

  • If the main purpose, or one of the main purposes, in acquiring the land was to realise a profit or gain from its disposal.
  • If the main purpose, or one of the main purposes, in acquiring the property which derives its value from the land was to realise a profit or gain from its disposal.
  • The land is held as trading stock.
  • If the main purpose, or one of the main purposes, of developing the land was to realise a profit or gain from the disposal of the land after it is developed.

Next stages

The Finance Bill 2016 will be discussed in the House of Commons for the report stage on 5th and 6th September. Further updates, where applicable will be advised thereafter.

Need more help?


Should you require any help with tax relating to property and land then please do not hesitate to contact your local MFW office. We have offices in Ashford, Cranbrook, Dover, Herne Bay, Maidstone and Sittingbourne.

 

About the author: Phillip Kearsey
Tax Manager, Herne Bay office

Phillip is a Fellow of the Tax Faculty of Independent Financial Accountants (IFA) and initially trained with the Inland Revenue, now HM Customs &Revenue.

Phillip has previously worked with a number of top 20 Accountancy Firms dealing with the members of the aristocracy, film & TV stars, racing drivers and people involved in the music industry. He joined MFW in 2007.

He has also had experience advising on Expat tax for individuals based in foreign countries including the United States of America, Canada, Germany and Japan.

Phillip has, in his career, written numerous articles for US newspapers and in addition given lectures on the subject of UK tax.

He is currently a committee member of Kent Chartered Institute of Tax (CIOT) and also a member of HMRC’s Working Together Group and MFW’s own Tax Committee.