Under capital gains tax changes, accidental landlords who let out their former homes will be affected to a greater degree than wealthy foreigners who sell UK properties, tax experts have argued.
The changes – which are due to come into force from April next year – will see a tax break for small property investors slashed, as well as an ‘oligarch tax’ on foreign owners who have made big profits on UK homes.
Chancellor George Osborne announced that the capital tax break available to those who are now letting a property that they once resided in, has been cut by half. This means that the tax-free period has now been lowered from the last three years of ownership to the last 18 months only.
The change will affect such owners from April of next year, while the capital gains tax levy will only apply to foreigners selling British properties from 2015. Foreign owners will then have to pay tax on future gains only after that date.
The Government has confirmed that it expects to raise an additional £360 million between 2015 and 2019 as a result of the tax change relating to former owner landlords. It expects to raise a further £125 million over the same time period through the ‘oligarch tax.’