Art market experts are concerned that new taxes on asset gains for overseas investments, coupled with a planned flat £30,000 ($60,000) levy for foreign residents, domiciled in the UK for over seven years, will put pressure on London’s appeal as a centre for buying art. The tax reforms, announced in the UK Treasury’s pre-budget report in October 2007, are to be implemented in April.
“Any tax that exists in London rather than, for example, New York, will have a detrimental effect on the capital’s competitiveness as an art market,” said Anthony Browne, chairman of the British Art Market Federation.
Reforms include the closing of a loophole whereby investment gains that arise in the UK on assets—including art—bought through an offshore mechanism, will be subject to a capital gains tax of 18% (the new flat level also due to be set in April).
HM Treasury’s data shows 114,000 people registered as non-domiciled residents in London at the end of the last financial year. They are believed to contribute around £12bn ($24bn) to GDP and £4bn ($8bn) to income in tax alone.
The Treasury believes “it is only fair that people who have chosen to make the UK their home…should make a reasonable tax contribution to the modern public services which support our society.” Spokesman John Battersby said that “the UK’s other 60m residents currently pay tax on any income that arises here: there is no reason why this should be different for non-domiciled residents.”
Originally appeared in The Art Newspaper as ‘New tax could hit UK collectors'