Mansion tax?
The Chancellor has refused to impose the ‘mansion tax’ the Liberal Democrats want, but the Government is cracking down on tax avoidance by owners of high value homes. These are defined as properties worth £2 million or more.
Where individuals try to avoid taxes by acquiring their property through a company, partnership or other structure, stamp duty land tax already applies at the high rate of 15%. If these properties continue to be held through such structures, an annual residential property tax will apply based on the property’s value at 1 April 2012 or at purchase if later.
The charge will vary from £15,000 to £140,000 per year, with the top rate applying to properties worth £20 million or more. It will apply from 1 April 2013, and the first payment will be due by 31 October 2013.
There will be exemptions for properties which are run as businesses such as hotels, farmhouses, houses open to the public, and those owned and used by charities.
Where the home is owned by an offshore company or similar structure, capital gains tax will apply when the property is sold. This is a significant change: overseas entities are not generally subject to UK capital gains tax.
Please discuss with us any concerns you have about these new property taxes.
