Commercial property owners could be stung for more than £8.6bn if they fail to revalue their property ahead of a major tax change, according to research by tax relief firm Catax.
From April 2019, UK commercial property held offshore will be subject to Capital Gains when it is sold. This means that properties held in trust in jurisdictions such as Jersey, Guernsey and the Isle of Man will be brought into line with those held on the UK mainland.
As it stands for commercial properties in the UK, held by British property entities, the original purchase price is used to calculate the capital gain. However, between now and April 2019, owners are being urged to ‘rebase’ to reflect their current value - meaning any future calculation for capital gains uses the new, more favourable, valuation.
The firm reported: “Analysis of HMRC Capital Gains tax receipts shows the average Capital Gain on commercial property is 44%of the total sale value, with taxation currently standing at 19%. With the average Capital Gain across the UK standing at approximately £350,000 - commercial property owners could be looking at a total bill of £8.6bn. In London alone, there are more than 37,000 commercial properties held in offshore trusts. Considering London sees an average capital gain of around £500,000, commercial landlords in the capital could be looking at a combined bill of £5.3bn.”