The Chancellor’s announcement of an additional 3% in stamp duty land tax (“SDLT”) on buy-to-let and second home properties (above £40,000) is a further blow to individual property investors from the UK and internationally. Figures produced today show that it is expected to be a major revenue-raiser with a policy objective of deterring these investors thus leaving more scope for owner-occupiers to get onto the housing ladder.
Commenting on changes to property tax, announced in today’s Autumn Statement, Jo Bateson, Tax Partner at KPMG in the UK, said:
“The Chancellor’s announcement of an additional 3% in stamp duty land tax (“SDLT”) on buy-to-let and second home properties (above £40,000) is a further blow to individual property investors from the UK and internationally. Figures produced today show that it is expected to be a major revenue-raiser with a policy objective of deterring these investors thus leaving more scope for owner-occupiers to get onto the housing ladder.
“These latest changes come off the back of the phasing out of interest relief on loans to purchase buy-to-let property and a new capital gains tax on non UK resident investors on second homes in the UK.
“These measures might dampen demand for the kind of properties that are marketed as buy to let investments. And investors may decide to re-evaluate the attractiveness of the residential market ahead of this announcement coming into effect from next April. There are a number of important issues still to be addressed such as precisely how the stamp duty changes will be applied: what is the definition of a second home, and what is the position of a purchaser who is at first unsure how it might be used?
“The chancellor mentioned in passing the acceleration of the payment of CGT on residential property as a consequence of the digitisation to a mere 30 days after sale from 2019. When taken with the proposal to reduce the SDLT payment date from 30 to 14 days, the Chancellor is increasing cash flow pressures for all investors in residential property. We are waiting for some important outstanding details such as how reliefs and allowances can be applied to a tax payment which is outside of self-assessment which I am sure will be part of the consultation process.
“This is another example of the Chancellor using increased SDLT rates to change behaviours (or be seen to) with regard to individuals entering into residential property transactions. This is the 14th change to property taxes over the past 4 years and recent experience has shown that individuals have opted to pay the higher taxes rather than investing differently. However, time will tell whether this additional change has finally tipped the balance.”
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