UK government cracks down on expat second home owners

Published:  9 Apr at 6 PM
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In a move aimed primarily at expats but sure to hit UK residents as well, the government has announced a crackdown on ‘flipping’ as a means of tax avoidance.

Flipping, the practice of changing which of two properties is an owner’s main home in order to avoid capital gains tax on a sale, was notorious as part of the MPs expenses scandal. Certain MPs were discovered to have flipped between their constituency and London homes, thus slashing their liability for tax.

The government’s plan, originally conceived to squeeze overseas owners of UK property, is now expected to hit many thousands of British citizens with more than one home. Under the present laws, it’s only necessary to have not rented out a property to have it declared as a main home, but the new laws will apply to whichever property is demonstrably the main home.

An alternative government plan is that tax officials will themselves identify which home has been used most during any one tax year. After the law is passed, the main residence will probably be designated according to a balance of evidence.

Although the decision as to which property is a main residence is likely to hit hard on expats with buy-to-let property in the UK, it will need to apply to UK-domiciled and resident owners as well. Taxes of around £100 million are expected to be raised via the proposal, with foreign-owned new properties in central London bought for investment believed to be a major target.
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