(MENAFN- Arab Times) In the recent seminar organized by Ahli United Bank titled "Recent Changes in the UK Taxation of Residential Properties for Non-UK Residents" the recent changes in the taxation system and their impact on ownership of properties in the real estate market were discussed. The seminar was well received and appreciated by the bank's elite customers. The seminar was hosted jointly by the leading London Law Firm Charles Russell LLP and Jones Lang Lassalle, a widely known real estate consulting firm in Europe, Middle East, Asia, the Pacific and the Americas. In his welcoming speech, Medhat Tawfik, the General Manager of the Private Banking and Wealth Management at AUBK emphasized that AUB private banking is always keen to bring its customers up-to-date on the latest development within the London real estate market and the changes in the taxation laws.
Tawfik pointed that these seminars are an important process as it provides our clients with a better understanding of their investment environment when buying or investing in the UK property market. Piers Master, a partner at Charles Russell, discussed the recent important changes in the UK tax treatment of residential properties which have been introduced over the last few months. Particularly important is the introduction of Capital Gains Tax for non-UK residents selling or giving away their properties.
Piers explained "The better news is that this new 'non-resident' charge usually applies only to any increase in value from April 2015, so the often significant increases in values before then will be sheltered from this tax. He then pointed that the UK's capital gains tax rate between 18 percent and 28 percent is still lower than most other Western countries. Master further spoke about changes to stamp duty land tax, the transaction tax payable when a property is purchased. He explained that since December 2014, the SDLT slab system has been replaced with a 'slice system' for UK residential property purchases completed from Dec 4, 2014 onward.
With the new rates being progressive, the impact has resulted in an increase in the SDLT on properties in excess of £1,125,000 with more expensive UK properties incurring SDLT at a rate close to 12 percent. Master further added that from 1st April 2015 the Annual tax on enveloped dwellings(ATED) became payable on residential properties owned by non-natural persons with a value of more than one million pounds but less than two million pounds and charged at £7,000 per year. But in the next year, from April 1, 2016, a new £500,000 - £1,000,000 band will take effect with an annual charge of £3,500.
Master also speculated about the possible tax changes after the UK's General Election on May 7, but he noted that all UK governments in the past have recognized the valuable contribution made by international investment into the UK; therefore, the hope is that any new UK government, of whatever political persuasion, will do the same. Adam Challis, the Head of Residential Research at JLL, commenting on the latest developments and the outlook of the residential property market in London, said: "The demand for real estate investment in the UK continues to grow and still provides a good opportunity for longer term investment.
Mr Challis indicated that the UK market is one of the most sustainable and vital real estate markets due to several main drivers including, but not limited to, its wealth preservation, expanding population, strong capital growth prospects and strong historic performance which continue to shape the demand on this market". Challis added that the market remains fundamentally well-supported but more circumspect than 12 months ago which is likely to persist until post-elections. Richard Mc Adam, Head of Residential Lending at Ahli United Bank (UK) plc formed part of the AUB Kuwait seminar.
He reiterated the Bank's message that AUB Kuwait Private Banking clients are always welcome to seek any assistance they may need through the AUBUK or AUB Kuwait offices in respect of UK property transactions. He also advised that AUB-UK will continue to extend all possible services and advice to AUB Kuwait customers, as the Bank works closely not only between the two offices, but also throughout its extensive network, to provide a seamless and smooth service. Mc Adam also shed some light on the UK's Regulated and Non-Regulated mortgage market. A Regulated mortgage typically being a facility that is under a personal name and all or any part of the property, is used for residential purposes.
Regulated mortgages mainly ensures that the borrowers are protected from unreasonable lending practices. Unregulated mortgages include buy to let and commercial mortgages thus afford less protection by the UK regulator. Duncan Taylor, who heads the Banks Fiduciary Marketing Team in London and David Preston representing the Banks offshore fiduciary business, AUB Trustees (Guernsey) Ltd also attended the seminar. Duncan Taylor explained the different legal offshore structures available via establishing trusts and/or companies for holding investments, properties and other assets that can be carefully structured to provide asset protection, confidentiality, preservation of family wealth and tax planning. The Seminar concluded with an open Q&A session and addressed all queries on the topics discussed at the event.
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