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The government is set to extend its radical plan to remove the main residence election for non-UK residents, according to a leading tax specialist.
Adviser and author Kevin Slevin learned from the Treasury that a mooted shake-up of the capital gains tax regime relating to property will affect all homeowners from April 2015.
The government is set to extend its radical plan to remove the main residence election for non-UK residents, according to a leading tax specialist.
Adviser and author Kevin Slevin learned from the Treasury that a mooted shake-up of the capital gains tax regime relating to property will affect all homeowners from April 2015.
A consultation document published last week – and open for comment until 20 June – proposes a CGT charge on non-residents who dispose of residential property, with two possibilities for imposing the levy: removal of the option to elect a main residence on which to receive tax relief, or replacement of the election with a fixed rule that identifies a main residence.
Decisions have yet to be made, but the final measures will be broadened to all taxpayers in an effort by ministers to avoid discrimination against EU residents through statute designed to tax gains arising on the disposal of residential property.
“It is my understanding that any attempt to leave the election in place yet limit its application to UK residents would be construed as a breach of EU law,” said Slevin. “I am told HMRC recognised that such an approach could be seen as an illegal restriction to the free movement of labour.”
He suggested that the Treasury consider drastically retooling the election option to allow taxpayers to declare a second property – such as a flat bought for its proximity to a workplace – to not be taken into account when establishing which property is a main residence.
“The election would prevent situations arising where the exempt status of a genuine main residence might otherwise be called into question,” added Slevin.
