Chance of capital gains tax hike on UK property
GUERNSEY residents who own property in the UK could be hit by a hike in UK capital gains tax.
The overall public financial cost of Covid-19 in the UK is estimated to be £300bn and an increase in CGT could be one way that British chancellor Rishi Sunak could make up the shortfall, according to tax experts Grant Thornton Channel Islands.
CGT is the tax levied on the profit achieved through selling an asset rather than from its overall value.
Assets subject to the tax include properties, shares and business assets.
Guernsey does not have CGT. But local residents who own residential property or other chargeable assets in the UK could potentially liable to pay the increased rates should the tax rise in the coming months.
‘We’re expecting capital gains tax to be one of the first to rise in the UK as it looks to balance the books in the wake of the economic impact of Covid,’ said Neil Hoolahan, tax director at Grant Thornton Channel Islands. ‘We know there are many islanders who hold property or assets, directly or indirectly, in the UK that would be impacted by these changes.
‘Capital gains tax is at a historic low, making it a logical choice for an increase, and many islanders may be caught by surprise to see their liability rise in the coming months when they dispose of these assets.’
He added: ‘I recommend anyone who owns these types of assets in the UK to get in touch with a tax expert to discuss their options going forward.’
