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."
By Melanie Gerlis
For The Art Newspaper