Crowe Horwath
TM
Horwath Taxation (Cape) (Pty) Ltd
Member Crowe Horwath International
January 2014
Proposed United Kingdom Capital Gains Tax on the disposal of UK immovable
property by UK non-residents
It has recently been announced that UK is to charge
Capital Gains Tax (CGT) on profits made on the sale of
UK immovable property owned by non-residents. The
proposal is that such disposals on or after 6 January
2015 will be subject to CGT. The rate is proposed at
28%. No CGT was payable by non-residents in the past.
It is important that UK non-residents owning immovable
property in UK should arrange to have such assets
valued before that date so as to create a current base
cost. CGT on a subsequent disposal will therefore
be calculated on the difference between the net sale
proceeds and such valuation (if such valuation is in
excess of the original cost of such property).
As the date draws closer, more details will become
available. Tax planning opportunities may also present
themselves during this time.
One also needs to consider the impact of such tax on
your home country tax. As an example, South Africa
taxes its residents (for tax purposes) on their worldwide
income and capital gains. The top effective rate of tax
on capital gains is currently 13,3%. Accordingly, UK will
tax at 28% and credit will be given in South Africa for
such tax (paid in UK) up to the amount of the South
African tax on such gain. Therefore no further tax will
be payable in South Africa as 28% will already have been
paid in UK. The South African economy loses out its
13,3% tax.
Bear in mind that the amount of the gain for UK tax
purposes is reduced by the growth in value of such
property since original acquisition until April 2015. For
South African tax purposes, the amount of the gain is
not reduced unless the property was purchased before
1 October 2001.
Those who own UK property need to plan carefully.
Horwath Taxation (Cape) (Pty) Ltd
7th Floor, 5 St. Georges,
St. Georges Mall, Cape Town,
8001, South Africa
+27 21 481 7000 Tel
+27 21 481 7081 Fax
tax@crowehorwath.co.za
Directors: KG Karro, YW Rybnikar, CI Jonkers, EI Hamman
www.crowehorwath.co.za
Horwath Taxation (Cape) (Pty) Ltd is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity. Horwath Taxation
(Cape) (Pty) Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts
or omissions of Crowe Horwath or any other Crowe Horwath member.
©2014 Horwath Taxation (Cape) (Pty) Ltd