Real Estate Investor Magazine South Africa Real Estate Investor Magazine - July 2017 | Page 59

This permits a full exemption from CGT on the gain where the
property has been the owner’s main residence from the date of
acquisition. If not, a proportion of the gain is exempt pro-rata to
the period of use as principal private residence.
• A letting relief is also available, in cases where the
property has been both a main residence and let
out.
• The maximum letting relief is £40,000 off the
otherwise chargeable gain.
• Non-residents who have acquired a property prior
to the 6th of April 2015 may use the value at this
date as their base cost, effectively only taxing the
uplift in value from that date onwards.
Trusts and Companies
Trusts’ gains are taxed at 28%, while the annual
exempt amount is capped at £5,650. In the case of
companies, a distinction is once again made between
UK companies and Non-resident companies.
• UK companies are taxed at the prevailing
corporation tax rate – currently 19%.
• Non-resident companies are generally taxed at
20%, except in cases where the property concerned
is subject to the payment of ATED (Annual Tax
on Enveloped Dwellings – we discussed this in
more detail in Part 1 in last month’s publication),
in which case CGT is 28%.
• For ATED-related gains on properties acquired
prior to the 6th of April 2013, companies may use
the value at this date as their base cost.
• Additionally, all companies are permitted to
uplift the purchase price, purchase costs, and
improvements by inflation.
• Properties acquired by non-resident companies
prior to the 6th of April 2015 may use the value at
this date as their base cost.
Inheritance Tax (IHT)
• IHT is the UK’s Estate Duty, levied on the
deceased estate of a resident individual on
worldwide net assets, unless their tax status is
“non-domiciled.”
• The outstanding balance on a mortgage on a UK
property will, therefore, reduce the sum subject to
IHT.
• The headline rate is 40%, with a tax-free threshold
of £325,000 per taxpayer.
• An additional exemption of £175,000 per taxpayer
applies where the property is the deceased’s main
home and left to children or grandchildren. This is
being phased in over four years.
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