Capital gains on BTL to be taxed as income

Reply to the comment left by "Jon Pipllman" at "26/08/2016 - 14:34":

If you are right John (and I hope you are) that's good thing because it means that far less people will be affected than it appears right now.

However, with the greatest of respect, The Law Society seem to think otherwise and they are far better qualified to interpret the words used than you and I.

It would be good to see specific reference to overseas / non residents in those specific clauses and I can see why the law society is raising the issue.

But given where it appears in the finance bill, I still lean towards it being aimed at non residents.

Let's see.

Reply to the comment left by "Jon Pipllman" at "26/08/2016 - 14:44":

Hi John

Being an overseas, non-resident then you will forgive me for not thinking that would be a good thing either.

It would mean that any landlord who had planned to live overseas in his/her retirement would be compelkled to pay significantly more tax when they come to sell their properties. How can it possibly be a good thing or even fair to trap people into staying in the UK for the rest of their lives, having spent so many years working towards a massive milestone in their lives only to have the finishing posts moved as they approach the end of the marathon they've been running?

Particularly as it goes on the sale date, not the date someone moved away from the uk

My reading, as a lay man, of this thread is the same as John Pipllman's and that the changes apply only to non-UK resident companies. This seems clear, not just, as John says from where it appears in the draft legislation but also from the Background note to the New Clause 12 (page 7 of John's link) that explains the intention to change the present situation where non-resident companies are charged to CT only on the profits attributable to a permanent establishment they have in the UK, so as to ensure a level playing field between UK developers and those based in offshore jurisdictions.

The Law Society is rightly concerned that if the proposed amendment has not been subject to proper consultation and scrutiny then it sets a disturbing precedent as it "may result in many investors paying income tax rather than a capital gains tax on the disposal of their buy-to-let investments."

It would be helpful if the Law Society would clarify whether their concerns here are for BTL investors generally or just non-UK resident investors.

I have to agree. I've also spent the last few hours reading the whole bill and in particular these parts. If you continue to read on, you'll also see the relevant dates that this applies to (Sections 80 & 81). Namely disposals on or after 5 July 2016 but not including arrangements (as defined in 30section 517Q of that Act) entered into before 16 March 2016.

The whole section from 75-81 is peppered with comments regarding double taxation which only applies to non-domiciled residents/offshore companies.

I hope we're right, but not good news for you Mark either way unless you've already taken action prior to 16 March.

Steady on guys..it says LAND not house. Generally in law unless a words meaning is defined ( or one might say redefined ) in any act then it should be given its ordinary every day meaning.
If theyd intended to apply this to houses they would surely have said so..because there are far more houses bought as investments than LAND. Our major intention and purpose as landlords of residential property is to obtain rent and perhaps later a capital gain from the dwelling house....we do not speculate on the land itself. Indeed our purchase and valuations thereof are usually entirely focused on the dwelling. Might be different if one bought several acres with one house upon it intending to seek consent to build more dwellings, As it is more normal to buy a dwelling occupying a relatively small plot without seeking to develop the land then the land or footprint on which the dwelling stands is ancillary only to our intentions.On that basis and with the described form of words I dont believe this is aimed at us and its doubtful whether it could be used against us without a new definition of LAND specifying that it includes land occupied by a dwelling house..being added to the legislation..

Im not a qualified lawyer but....this smacks of an intention to slow down or restrict landbanking rather than investment in housing. In any event IF they did intend to target houses..they havent said that by Land they also mean residential dwellings,, they should have specified that if they intended it .If they havent then i doubt it could be used to put income tax on sales of residential property...one is primarily selling a dwelling..the land is ancillary rather than a major intention or excercise in LAND investment / speculation..I wouldnt do anything too dramatic at this point.

Reply to the comment left by "michael fickling" at "26/08/2016 - 17:55":

Land is defined in the section:

(3)In this section “land” includes—

(a)buildings and structures,
(b)any estate, interest or right in or over land, and
(c)land under the sea or otherwise covered by water.

Here is Mazars' view on it

http://blogs.mazars.com/letstalktax/2016/08/trading-in-and-developing-uk-property-new-rules-from-5-july-2016-finance-bill-2016-update/

Extract - note the specific reference to offshore

"The legislation now comprises clauses 75 to 81 Finance Bill 2016 and amount to 36 pages of detailed legislation. A dedicated HMRC page has all of the related explanatory notes to the new legislation (and the Technical Note).

The measures introduce a specific charge (income or corporation tax as appropriate) on profits from dealing in or developing land and other immovable property in the UK. These rules are being introduced to ensure that offshore property developers of UK land will be brought into the charge to UK tax."

>Mark A.

Two that I would understand if you chose not to answer on a public forum / outside your consulting clients / at all, but I will ask anyway.

Have you sold UK property since you moved to Malta and concluded matters arising with HMRC on that sale?

Have you sold UK property since the 5th July 2016 (when the legislation being discussed in this thread kicked in) and concluded matters arising with HMRC on that sale?