UK to tax overseas investors to tackle soaring property prices
Britain plans to hit overseas property investors, including those based here, with a new capital gains tax in an effort to stem a flood of foreign cash blamed for a rapid rise in house prices in London in particular.
The UK's Chancellor of the Exchequer George Osborne said he would impose capital-gains taxes on home sales by non-residents from April 2015.
The UK plan will bring the tax regime for non-resident investors in line with the tax rate that British investors currently pay.
The move is aimed at raising additional revenue and helping avert unsustainable increases in London property prices.
"It's not right that those who live in this country pay capital-gains tax when they sell a home that is not their primary residence, while those who don't live here do not," Mr Osborne said.
The UK government is expected to publish a report early next year on how to implement the capital-gains tax on non-residents, according to the UK Treasury.
Capital-gains tax rates for second homes of UK residents currently range from 18pc to 28pc.
Overseas investors helped London's luxury-homes market outperform other UK real estate in the last four years as buyers looked for a haven from economic and political turmoil.
People living outside of the UK account for about half of all new home purchases in London's most expensive neighbourhoods, according to London-based property broker Knight Frank.
The new tax plan was announced as part of the UK's Autumn Statement presented to the Westminster parliament.
"We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong," he told parliament as he gave a half-yearly update on the government's economic plans.
As recently as April, Mr Osborne was under heavy criticism from Labour as the economy flat-lined. The International Monetary Fund also urged him to speed up spending.
But a sudden pickup in growth in recent months means the coalition government's goal of fixing the public finances is no longer slipping out of reach.
Mr Osborne said British growth was faster than other major advanced economies, including the US, and he announced the first big fall in projected public borrowing since the coalition took power in 2010.
The updated economic forecasts were mostly in line with economists' expectations.
But there was bad news for pensioners as Britain looks set to raise the state pension age to 68 in the mid-2030s, a decade earlier than previously expected, to offset the impact of improving life expectancy, the government said.