Here is some advice for the many Landlords with properties in the Ware, Hoddesdon and Hertford regions who are living abroad as, according to one accountant, you should get these properties valued now, even if you have no intention of selling.
She warns that failing to get a property valuation as soon as possible could mean you end up paying more tax when you do eventually sell. Her advice relates both to ex-pats and to foreign nationals with rental properties locally.
Clearly, everyone needs to take their own professional advice suited to their own circumstances, but according to Carol Cheesman of Cheesmans Accountants, changes to Capital Gains Tax have important implications.
Until April 5, non-UK residents could potentially dispose of UK assets without incurring a charge to Capital Gains Tax liability. However, from April 6, a charge to CGT will arise on non-UK residents (including trustees, certain companies and personal representatives as well as individuals) who dispose of UK residential property. Importantly, she says, the charge will only be applicable to gains accruing after April 6.
To help clarify this, Cheesman gives the following example: a UK residential property purchased in 2005 by a non-UK resident for £150,000 is valued at April 6, 2015, at £300,000 and it is sold in June 2015 for £310,000.
For a UK resident selling a buy-to-let property the gain arising would be calculated as the difference between the sale proceeds of £310,000 and the original cost of £150,000.However, under this new rule introduced for non-UK residents, the gain will be the difference between the sale proceeds and the value of the property as at April 6, 2015.
If non-UK resident property owners do not get a valuation now, then an alternative would be to apportion the total gain over the whole period of ownership which could result in a hefty tax bill. A non-UK resident could also attempt to obtain a retrospective valuation, but this will be complex, time-consuming and costly.
Cheesman also advises that on selling the property, a Non-Resident Capital Gains Tax (NRCGT) return will need to be filed with HMRC within 30 days of completion.
If the non-UK resident does not have an “established relationship” with HMRC, that is, they do not need to complete and file a UK tax return, then the NRCGT return will also need to contain an assessment of the tax due and this tax will also need to be paid within 30 days of completion.
Where there is an “established relationship”, the assessment of tax will be contained in the tax return that is to be submitted to HMRC for the year in which the disposal was made. The tax due would then be payable by the usual due date. It is likely that HMRC will penalise those who do not make a disclosure, even when there is no tax due.
Cheesman says: “It is important therefore for those non-UK residents with relatively straightforward tax affairs who do not usually correspond with HMRC (e.g. a retired pensioner) to be aware of the requirements for notifying them of a disposal of a UK residential property. “In conclusion, it is highly advisable to obtain a valuation of the property as soon as possible in order to avoid guesswork in the future, or costly valuation fees.”
So if you are a Landlord living overseas and have rental properties in the Hertford, Ware, Hoddesdon regions, or the surrounding areas, please feel free to get in touch with us and we will be happy to provide a current valuation for you, in writing with no charge.
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I have been in and around the Hertfordshire property market for over 25 years, starting as an estate agent in the county town of Hertford and now running a successful lettings and property management company based in Stanstead Abbotts. I have let and managed property all over Hertfordshire from the area that I currently work to Wheathampstead where I owned and managed a lettings & estate agents to Watford and surrounding areas where my company acted as a marketing agent for one of the largest property management companies in the country”
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