Stamp Duty rise to tackle homelessness

Credit: Sharon Latham. Tackle4MCR

The stars were out in force last week in Manchester to raise funds for the Tackle4Mcr campaign, the proceeds of which will go to support Mayor Andy Burnham’s A Bed For Every Night campaign, which aims to put an end to rough sleeping by 2020.

And while Noel Gallagher, Gary Lineker, Ole Gunnar Solskjaer joined City captain Vincent Kompany and friends to raise over £200,000 on the night HMRC was busy putting its own plans in place to tackle homelessness – raising stamp duty by 1% for overseas buyers.

Money raised from the surcharge will be spent on ending rough sleeping, according to the  consultation paper from HM Revenue & Customs (HMRC) which was published earlier this week.

Stamp Duty is currently charged at rates starting at 2% on the portion of a home valued at between £125,001 and £250,000 up to 12% on any amount over £1.5m.

The additional higher tax rate will apply to anyone who’s spent less than six of the past twelve months living in the UK and it’s estimated that the extra charge will raise up to £120m a year which will be used to combat rough sleeping.

The government believes that foreign buyers are pushing up house prices, making it more difficult for British residents to purchase their own homes. Theresa May said: “It cannot be right that it is as easy for individuals, as well as foreign-based companies, who don’t live in the UK and don’t pay taxes here to buy homes as hard-working British residents.”

Whilst it’s a positive move that the government is looking at ways to alleviate the housing crisis, complicating the tax system even more than it is already is a hard price to pay.

The tax raised through the additional stamp duty is the Government’s way of effectively punishing those they consider to be perverting the housing market without tackling the real issues of poor housing policy, a lack of innovation regarding property renovation and ineffective money laundering procedures.

Our property clients have already been subject to significant change in the property tax system in recent years, both residential and corporate, and this is another layer of complexity that will need to be carefully navigated by their advisors to avoid it resulting in additional costs.