In the Statement on 5 December, the government could extend the Mansion Tax by reducing the qualifying threshold from £2m to £1m or even reducing the threshold for particular areas. The government could also extend the charge to properties owned by non-residents.
Baker Tilly said the Mansion Tax change is more likely than others because the mechanism to is already in place.
It added: “Further revenue streams are required to meet public expenditure demands and this is likely to be less politically sensitive than many other options.
“The tax is relatively cheap to collect and would be extremely difficult to avoid. However, the property wealth is, arguably, a major component of the ‘feel-good’ factor and the adverse consequences of an insensitively imposed change could be high.”
A Capital Gains Tax (CGT) may also be introduced on UK property sales by non-UK resident individuals. This new tax charge and the frequency to changes in the taxation of UK property may drive overseas investors away from the UK, said the expert.
On Stamp Duty, Baker Tilly said ity didn’t expect a change but the government could commission a review into simplifying the tax.
“A change that would be welcome by many would be a shift from the slab system under which the entire price is charged at the higher rate when a threshold is exceeded to a slice system, under which the higher rate of SDLT only applies to the excess over the threshold.”
Stamp Duty will begin to be charged this way in Scotland under the Land and Buildings Transaction tax from April 2015.
However, any change may adversely affect an already over-priced property market with sellers adding Stamp Duty on to the price of their homes. A better move might be to consider stepped changes, such as a refinement to the slab system, said the firm.
