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Law: Property purchase abroad will be eased by new tax law

Buying property overseas will be a little easier when legislation published last week becomes law.

The Revenue & Customs has published a bill exempting individuals from a benefit in kind charge on their own overseas properties.

Rules designed to catch benefits in kind for employees can impact owners of overseas properties.

The Chartered Institute of Taxation (CIOT) says these rules can technically catch UK individuals buying an overseas property through their own local company. This is common in France and Spain and also in newer destinations such as Bulgaria.

The current rules say that the individuals are deemed to be directors of their overseas company and so provided with accommodation by it, even though they are normally providing all the funding for the property out of their own resources.

The new rules will delete the charge and be retroactive to 2003. ‘It is also good to see that the new rules will be retrospective to 2003. While the Revenue has, generally, not collected tax in these situations, pending resolution of the issue, anyone who has paid a benefit in kind tax charge will be able to claim their money back,’ says a CIOT spokesman.

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