Chartered Institute of Taxation president Patrick Stevens said the combination of an annual charge, a capital gains tax charge and the higher rate of stamp duty for expensive residential properties bought through offshore companies proposed in the Finance Bill would make the use of such structures “really unattractive” in the future.
“None of these provisions should have any effect if individuals are willing to make the purchase in their own name but this will be unattractive for several people especially those subject to forced heirship rules,” he said.
“It must have a continuing effect on the top end of the UK property market and will make a purchase far less attractive for a minority of people. The overall effect of these changes is likely to be far wider than the original intention of reducing Stamp Duty Land Tax avoidance.”
Stevens was commenting on figures released from Knight Frank which showed a sharp fall in the proportion of properties bought via companies in the months after the proposals were first floated.
Over 13% of properties worth £1m or more were bought through these structures in the 12 months prior to the March budget. However, in the following months – during which a high Stamp Duty was introduced and proposals for annual charges and an extension of capital gains tax were floated – this dropped to 2.1%.
