Draft Finance Bill 2013: Businesses will breathe sigh of relief at changes to Annual Residential Property Tax
Craig Leslie, Head of Stamp Taxes at EY, comments on the draft Annual Residential Property Tax clauses, published today:
"While many businesses will breathe a sigh of relief when they see the draft Annual Residential Property Tax clauses published today, there will be a number of taxpayers who feel hard-done-by simply for choosing to hold residential property through a company.
"HM Treasury and HM Revenue & Customs have clearly listened to the well-founded concerns that property-owning businesses - such as property rental businesses, developers, businesses using residential properties as part of a trade, and the historic houses and agricultural sectors - could be accidentally caught by this new tax net. New exemptions have been introduced for these businesses.
"However, there will be a significant number of property owners who feel aggrieved at being asked to pay up to £140,000 each year, per property, for the privilege of holding high-value residential properties (those worth over £2m) through companies. Where the Government may see potential avoidance, many of these taxpayers will feel they hold their properties through companies for legitimate reasons, such as managing foreign inheritance rules.
"However, given the Government's clear resolve to increase the tax burden on these high-value residential properties, it could be said that this will amount to a very narrow mansion tax.”