The U.K. may slap a new tax on foreign property investors in an attempt to burst a potential property bubble in London, according to reports from Sky News.
Sky News said Chancellor of the Exchequer George Osborne was mulling adding a capital gains tax on any surplus made when foreign-owned U.K. home are sold to next month's Autumn Statement on the economy.
The U.K. Treasury neither confirmed nor denied the reports when asked by CNBC, but described them as "pre-Autumn Statement speculation".
U.K. residents must pay capital gains tax — a tax on any increase in the value of their possessions — when they sell their second homes, but foreign buyers are currently exempt.
"The exemption of CGT (capital gains tax) for foreign owners unarguably represents an inequality with domestic buyers. The flip side this exemption, however, is that it is a tax incentive, which attracts foreign investors into the U.K. and represents a competitive edge over other global capitals," said London Central Portfolio (LCP), an advisory firm specializing residential investment in London.