Expat property investment in the UK to attract increased stamp duty

Expat property investment in the UK to attract increased stamp duty

Expat property investment in the UK to attract increased stamp duty

Non-UK residents are about to be hit by a rise in stamp duty when buying British property.

A proposed hike of one per cent on stamp duty payable as part of UK property purchase by non-residents is now in the consultation stage. When agreed, the increase will be due on homes in England and Northern Ireland. The move is expected to raise tens of millions, with the British government planning to use the cash to provide help for the homeless now sleeping rough in UK city streets.

Although lawmakers have put the blame for house price inflation and its effects on first-time buyers squarely on buyers from overseas, questions are still being put forward about the effect of the increase on the numbers of overseas buyers interested in UK property. Professionals in the sector are saying the move is childish in its conception, with most hoping it won’t pass the discussion stage. Some are stating their clients are taking the rise in their stride, but sellers and some agents are wailing about the possible consequences.

The proposed surcharge comes on top of previously introduced measures introduced in 2016, including a stamp duty increase on buy-to-let properties or second homes. In real terms, the one per cent rise increases stamp duty on homes selling for amounts from £925,000 to £1.5 million to 14 per cent, with properties costing over £1.5 million seeing a tax increase of 16 per cent. Movers and shakers in the sector aren’t especially concerned, as their clients aren’t deserting in droves due to a one per cent tax increase, believing capital growth after purchase will take care of the extra amount.

However, British expat investors working overseas and considered non-residents for tax purposes may not be best pleased as the non-resident ruling is calculated differently for property investment purposes. In this case, the ‘fewer than 183-day stays per year in the UK’ is now counted only in the 12 months prior to the property purchase, a rule which will be difficult to monitor, cause annoyance at best and the decision to purchase an investment property elsewhere in Europe at worst.

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