Accountancy firm, James Cowper Kreston, has warned that the new stamp duty charge will hit married couples, civil partners buying their first home together and people that own property overseas.
Stephen Barratt, private client tax director at accountants and business advisers James Cowper Kreston, said the 3% rise in stamp duty rise will “create uncertainty, introduce many anomalies and take a long time to fully bed-down.”
When the new legislation comes into force this April married couples and civil partners will be treated as one unit and this could trip some people up, Barratt said.
“If, as is quite common, one or both own a home before they marry/enter into a civil partnership and then buy a home together without selling their previous homes, say, for rental purposes, it seems that the surcharge will apply unless all existing residential property is sold,” said Barratt.
He also believes that the new charge rules will also catch out people that own property outside the UK.
“The surcharge will only apply to residential properties purchased in England, Wales and Northern Ireland, but if a property is already owned anywhere else in the world a new residential property will be considered an additional property and the surcharge will apply,” said Barratt.
Chancellor George Osborne announced a new additional 3% stamp duty rate for landlords and second home owners in the Autumn Statement as part of the government’s plan to boost home ownership by dampening the buy-to-let market.
With little time left until the consultation closes on 1 February, Barratt said that the government is unlikely to make any changes at this stage.
Barratt said: “And the fact that the new rules are intended to apply to completions on or after 1 April 2016 will mean that many purchasers will be exchanging contracts now without knowing what the final rules will be. This will create uncertainty.”
The surcharge will apply to the whole price payable for a property by joint owners even if the property is an additional property for just one of them, unless the replacement exemption applies.
“Until now stamp duty has typically been a straightforward matter to administer on residential property transactions as a one-off item. If these rules are implemented, and at this stage we only have a consultation document, they will represent a significant additional complexity to property taxation involving additional transaction costs as solicitors and accountants carry out additional due diligence to ensure that the correct rate is applied, and, where appropriate, refunds claimed,” Barratt said.
“All that said, whether these changes will do more than simply dent the British love affair with property remains to be seen,” he added.
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