Posted by Fiona Feggetter, Solicitor
Autumn Statement – a private client summary
In contrast to July’s Budget, the Autumn Statement contains very little in relation to personal taxation. Of particular note are the following points:
The Government appears to be attacking second home ownership again with an announcement that they will be introducing new rates of stamp duty next year, which will be 3% higher on buy-to-let and second homes (it still remains to be seen how they will define ‘second homes’). It is understood that corporate property development will not be affected. Once again, investing in commercial property sounds like the more attractive option.
They are also imposing an onerous duty on sellers of second homes/other property on which Capital Gains Tax (CGT) is due. From April 2019, vendors will have to make a payment on account of any CGT due on the disposal of residential property within 30 days of the completion of the disposal. The Government will publish draft legislation for consultation in 2016. This is very much in line with their aim to have “real time” payment of taxes, but in reality it is going to be very difficult to have an accurate picture of the tax due, so it is likely people will have to overpay to avoid penalties and will then have to reclaim the tax at a later date.
Despite much speculation, no changes to the rules relating to Deeds of Variation were announced.
There is also to be a new penalty equal to 60% of tax due for all cases successfully tackled by the General Anti-Abuse Rule (GAAR).
And finally, control of some of the Welsh income tax will be devolved to the Welsh Government.
Based on the above points and the recent estimate that prime central London property is overpriced by 20%, this could pave the way for a long overdue readjustment in property values. It’ll be interesting to see how this unfolds and what it means for our clients.
For more information, contact our specialist Wealth Protection & Estate Planning team
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