A new Stamp Duty Land Tax (SDLT) surcharge could risk further confusing the public and those involved in property transactions, according to a leading tax body.
They have warned the Government following their proposal to add a one per cent Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland.
The move would follow the introduction in April 2016 of the three per cent higher rates of SDLT on additional dwellings, significantly increasing the tax burden on overseas landlords.
According to the consultation document, the new charge will apply to any person who is non-resident in the UK, including certain UK-resident companies which are controlled by overseas shareholders.
However, crown employees working abroad will not have to pay the surcharge at all whilst those who buy a residential property and then move to the UK will be eligible for a refund of their extra payment.
Mel Stride, Financial Secretary to the Treasury and Paymaster General said: “The UK is and will remain an open and dynamic economy, but some evidence shows that non-UK resident buyers of UK property could be inflating house prices. A one per cent surcharge could help more people own their own homes in the future.”
While the proposed additional one per cent rate is designed to curtail overseas interest in UK property and keep property prices at bay, the Chartered Institute of Taxation (CIOT) has appealed to the Government to “hold off on adding further complexity to the taxation of residential property”.
In response to the Government’s consultation document, Brian Slater, Chair of CIOT’s Property Taxes Sub-committee, said: “Stamp Duty Land Tax (SDLT) has been the subject of technical change in virtually every year since its introduction in 2003.
“The complexity of SDLT will be compounded by the planned one per cent surcharge. We urge the Government to refrain from making further changes before the impact of recent changes to the taxation of residential property are assessed and the evidence base for the surcharge is evaluated fully.
“This policy measure is aimed at house price inflation that, in turn, needs to be considered in the context of other recent taxation changes affecting non-UK resident buyers such as the introduction in 2015 of non-resident capital gains tax and the extension of inheritance tax in 2017 to non-UK companies owning residential property. The full impact of these measures is yet to be seen.”