The British Property Federation (BPF) has expressed its support for a government announcement that widely held institutional investors should not generally be subject to the proposed extension of capital gains tax to non-UK residents.
In its response to the government’s consultation into implementing a capital gains tax on non-residents back in June, the BPF expressed its concerns that the concessions for the tax did not adequately reflect the diversity of investment structures used by widely-owned institutional investors, which could threaten investment into the UK’s real estate market, in particular into the private rented sector and build to rent. The BPF highlighted that widely held institutional investors need to be encouraged to put their money in the UK and that a blanket extension of capital gains tax could be an unwelcome deterrent.
The government intends to set the scope for the new tax by reference to a form of ‘close company’ test, drawing on existing legislation as suggested by the BPF in its consultation response.
Ion Fletcher, Director of Policy (Finance), British Property Federation, said: “We are thrilled that the government has recognised that large-scale institutional investment is crucial to increasing the UK’s housing supply, and that imposing capital gains tax on overseas funds could be detrimental to the economy. We are currently facing a housing crisis and it is important that government maintains a stable tax environment to attract overseas capital, which will help deliver economic growth. However, much work remains to be done on the all-important details of the new tax and we will continue to engage with government to ensure that overseas investment is safeguarded.
“Our consultation response outlined particular concerns about the impact of government proposals for investment in the nascent build-to-rent sector, which has so far relied on overseas institutional investors for a number of significant projects, so this announcement is reassuring in that respect.”
Ion Fletcher, Director of Policy (Finance), British Property Federation, said: “We are thrilled that the government has recognised that large-scale institutional investment is crucial to increasing the UK’s housing supply, and that imposing capital gains tax on overseas funds could be detrimental to the economy. We are currently facing a housing crisis and it is important that government maintains a stable tax environment to attract overseas capital, which will help deliver economic growth. However, much work remains to be done on the all-important details of the new tax and we will continue to engage with government to ensure that overseas investment is safeguarded.
“Our consultation response outlined particular concerns about the impact of government proposals for investment in the nascent build-to-rent sector, which has so far relied on overseas institutional investors for a number of significant projects, so this announcement is reassuring in that respect.”
Source: British Property Federation
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