Jersey Backs Report Against UK Property Tax Plans
by Jason Gorringe, Lowtax.net, London
14 August, 2014
A new report, which seeks to dissuade the UK Government from going ahead with plans for a new capital gains tax on non-resident UK property owners, has been welcomed by Jersey Finance – the promotional agency for the island's financial services industry.
The report estimates that the owners of London's most expensive real estate spend GBP2.4bn (USD3.85bn) a year on average in the UK, on improvements to their homes, in shops and restaurants, and on employing staff. The report rebuts the presumption that non-resident property owners do not contribute to the UK economy.
The report was commissioned by Westminster Council after the UK Government announced its intention to compel non-residents to pay capital gains tax on property sales regardless of how the transaction is structured. Unlike other countries that collect tax on gains relating to disposals of residential property located within their jurisdiction, the UK does not generally charge CGT on disposals by non-residents, but this is proposed to change from April 2015.
Jersey Finance said the report powerfully reinforces the earlier findings of a report from Capital Economics that Jersey adds GBP9bn of value to the UK economy, supports 180,000 jobs, and generates GBP2.3bn for the UK Exchequer (almost as much as the UK music industry). Jersey and the other Crown Dependencies, Guernsey and the Isle of Man, are leading providers of property structuring services for international investors into the UK market. There are concerns that the measure will lead to a significant decline in the number of non-residents persons acquiring expensive UK property.
The report points out that Westminster, a district in London, yields more Stamp Duty Land Tax (SDLT) than 29 of the largest local authorities in the UK combined.
Councillor Robert Davis, Deputy Leader of Westminster City Council and Cabinet Member for the Built Environment, said the report "strongly counters the perception that overseas investors are buying high value properties in London as an investment and then leaving them empty."
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