Capital Gains Tax - are you prepared?

A report by DLA Piper and YouGov

  • More than half (58%) of respondents in DLA Piper study say their UK real estate investment strategy will be unaffected by CGT

  • 43% of investors will wait until new rules clarified before assessing ownership structure of their holdings

  • Despite potential headwinds, London retains #1 attractiveness ranking among international cities for real estate investment

From April 2019, most non-UK resident tax payers will pay capital gains tax on the direct and indirect sale of UK real estate. Further, the sale of a 25 percent interest or more in entities that own UK real estate will also attract CGT or corporation tax from the same date, unless an exemption applies. There is also a special regime for collective investment vehicles.

These significant changes represent the latest in a long line of new rules aimed at property investors active in the UK market. As long-term investors and established players in the real estate sector know only too well, property has been somewhat of a cash cow for HMRC in recent years, with a host of changes being introduced, each adding complexity. This has led to a certain amount of change fatigue in the real estate sector, which has become accustomed to ever evolving market conditions.

Against this backdrop, we have partnered with YouGov to canvass the views of 100 senior respondents from the real estate market to gauge awareness of, and preparedness for the CGT changes and, ultimately, understand how they might affect future investment strategies and property values.