EY Budget reaction: Stamp Duty on Expensive Homes - the Empire strikes back
Patrick Stevens, tax partner at EY comments:
“Stamp Duty avoidance on the purchase of expensive homes has been rife for well over a year. Many people have wondered why the loopholes have not been closed down before now. Now that the counteraction has arrived it is draconian.
“Anyone foolish enough to transfer a house (worth over £2m) into a company in the future will pay 15% Stamp Duty. It means that this will just not happen. For those houses worth over £2m that are already in companies, there is the promise of "a large annual charge" (to be consulted on) and a Capital Gains Tax charge if they are sold out of the company after April 2013. All of this is clearly aimed at making people close down companies holding their houses before April next year.
“An alternative way of avoiding this Stamp Duty was to use the detailed provisions of the Sub sale rules. This has also been closed down. Finally the Chancellor stated that if people found new loopholes in this area of tax they would be immediately closed down with retrospective effect.
“Many people will be able to understand the reason for these changes. However some people hold property through companies for reasons completely unconnected with tax. For example, for people who come from certain other countries who have forced heirship rules, it is the only way of passing on their assets as they wish to do so. For others it is important to maintain privacy about their assets. In these and other cases these rules will have difficult side effects.”