Budget 2014: Industry backs 15pc stamp duty change
In his 2014 Budget George Osborne announced that those buying property through a company would incur 15% stamp duty rates if the property is valued at £500,000 or more.
He said: “From midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty.
“Many of these are empty properties held in corporate envelopes to avoid stamp duty.
“This abuse will end.”
Charles Haresnape, Aldermore Bank’s residential mortgages managing director, argued that the measure spells good news.
He said: “Don’t expect the overheating London property market to miss a beat, but these new measures may encourage developers to sell more properties to UK buyers rather than overseas investors.”
Toby Ryland, corporate tax partner of HW Fisher and Company, was also pleased with the announcement.
He said: “Few will shed tears for the wealthy foreign buyers of British property who could suddenly face a 15% rate of stamp duty.
“But the Chancellor’s decision to close this tax loophole is more about levelling the playing field than boosting the tax take. Foreign buyers will no longer enjoy big tax advantages if they buy through a company rather than as an individual.”
Ray Boulger, senior technical manager at John Charcol, agreed that the primary focus is closing the loophole, adding that he does not expect the change to have widespread implications.
He said: “I suspect the number of properties is going to be pretty small.”
Similarly Paul Frost of buying agency Prime Purchase added: “Will the reduction in purchase prices from £2m to £500,000 have any impact?
“It might put off a buyer from Paris from purchasing a one-off pied a terre in the middle of London via a corporate envelope but many will simply buy in their own name instead.”
He also speculated whether the change sets precedence for mansion tax.
He said: “It is telling that the level at which those buying property via a corporate envelope will have to pay 15% stamp duty has fallen from £2m to £500,000, not long after the higher level was introduced.
“There are fears that such a tax creep would be similarly applied to mansion tax were it to be introduced, so that while it may initially hit what you might consider rich people owning a £2m home, before long it would drip down so that those earning a £1.5m or £1m home would be affected.”