Chancellor Philip Hammond, in his November 2017 Budget last Wednesday, introduced plans to charge capital gains tax on overseas property investors dealing in commercial property. This could mean that some overseas investors stop investing in the UK commercial property market.

Quoted in an FT.com article from last week, Kevin Nicholson, head of the professional services firm PwC, said this was:

“[A] major change in direction [that] could undermine the attractiveness of investment in UK infrastructure at a time when it’s needed most.”

The Treasury announced that the new tax rules would be in force from April 2019 and were designed in an attempt to reduce the number of multinational organisations holding property in the UK via offshore structures.

HM Revenue and Customs is starting a consultation process about the new rules, but is thought to be committed to their introduction.

Steve Wheeler of accountants Moore Stephens is concerned that when UK leaves the European Union, these new rules could negatively affect the commercial property market. He said:

“Foreign investors have numerous options of where to invest their funds. As the UK leaves the EU, it should give investors every possible reason to choose the UK. This move by the chancellor may do the opposite.”

The new rules should not affect British-based property investors unless they use offshore companies to buy commercial property. Applications by individuals or UK businesses for commercial mortgages used to purchase property should also be unaffected by the new changes.