The Government has announced that it will publish draft clauses for the Finance Bill 2013 by 11th December 2012. Included in these will be draft provisions giving effect to the Chancellor’s proposals on the taxation of high value UK residential property.

In his 2012 Budget, the Chancellor announced an immediate increase in SDLT on residential property worth over £2 million, together with a consultation on the introduction of an Annual Property Tax and an extension to CGT.

It was suggested that the Annual Property Tax would apply to residential property worth over £2 million and owned by ‘non-natural’ persons, whether UK or non-UK resident. Properties would be banded by value and charged accordingly on an annual basis.

The extension to CGT would also apply to UK residential property worth over £2 million and owned by non-natural persons who are non-UK resident. There would be a charge on any gains realized by the disposal of such a property, and on the disposal of shares in a company where more than 50% of the value of the company is attributable to the value of the UK residential property.

The consultation period ended on 23rd August 2012 and we now await the draft legislation in December.