Tag Archives: real-estate
UK taxman cracks down on property tax avoidance schemes
The UK taxman has collected £301.8 million in unpaid property tax due to what is described as an aggressive clampdown on stamp duty avoidance. HMRC’s new Counter Avoidance Directorate collected the amount in the last year as part of a policy to crackdown on Stamp Duty and Land Tax (SDLT) avoidance schemes. According to private client law firm Collyer Bristow, the data which was provided to them by HMRC, shows that the policy has been a success. The Counter Avoidance Directorate was first established in April 2014 in order to bring together HMRC’s work on marketed tax avoidance schemes and policy work on avoidance. ‘The Government’s aggressive clamp down on SDLT avoidance schemes over the last few years is now bearing fruit. The high returns from compliance investigations mean that this area is likely to remain under the spotlight for some time to come,’ said James Badcock, partner at Collyer Bristow. He pointed out that house prices have soared in recent years- particularly in London and the South East- which means many taxpayers face a substantial SDLT bill on their purchase. ‘Avoidance schemes were being used to reduce SDLT on what for London are relatively modest properties in the £1 million region as well as very high value properties. As well as the Government closing down schemes with legislation, HMRC has tackled previous planning through the disclosure regime, better resourced investigations and litigation,’ he explained. He also pointed out that whilst in many cases there is likely to be a legal justification for transactions which allowed an SDLT liability to be avoided, HMRC can be expected to challenge the schemes and anyone who is concerned at all should now seek advice. ‘Individuals who decided to engage in the planning because it seemed so easy at the time may not have the stomach for the fight once faced with an HMRC challenge This can be expensive but another critical factor is a climate in which engaging in abusive tax avoidance can cause reputational damage to those in the public eye,’ he added. Collyer Bristow highlights that changes to the rates of SDLT were introduced in last year’s Autumn Statement. The new rules included the introduction of a graduated rate moving away from the sharp increases resulting from a property just exceeding a threshold which could seem unreasonable. The change means anyone purchasing a house for less than £937,000 will see SDLT cut or remain the same whilst those buying the most expensive properties are likely to face a higher bill. Continue reading
New tax free savings vehicles launched for first time UK buyers
Would be first time buyers in the UK can now take advantage of a new financial product that allows them to save for a deposit on a home tax free. The government’s Help to Buy ISA launched today and means that people can save £200 each month, up to a maximum of £12,000, and the government will provide a 25% bonus on the interest and contributions, up to a maximum of £3,000, when the saver purchases a property. According to Mark Hayward, managing director of the National Association of Estate Agents (NAEA), it will provide a boost to first time buyers hoping to make the climb onto the property ladder. ‘It seems as though first time buyers are at the top of the government’s agenda following the further helpful initiatives announced during last week’s Autumn Statement which means that we might finally begin to see first time buyers cutting through the market. But he pointed out that although the Help to Buy ISA is a starting point for first time buyers and it will help them on the way to raising a deposit, there’s another major reason why they are feeling pushed out of the market and that is not enough homes to buy. ‘This is the lack of housing, specifically affordable housing available to all house buyers whether that be first time buyers, all the way to last time buyers. In order to help first time buyers find their feet in the market in the long term, the issue of supply needs to be addressed,’ explained Hayward. ‘Chancellor George Osborne’s announcement that he’ll be building 200,000 new starter homes is a good place to start, but until the wheels are put into motion, we just won’t see a substantial change for first time buyers,’ he added. Dave Bexon, Group sales and marketing director for Redrow Homes, welcomed the launch as raising a deposit is regularly cited as one of the biggest barriers to home ownership for young people. ‘This pioneering scheme should encourage a generation of renters to save for a down payment on a home, with the knowledge that the hard earned money they set aside will be topped up with a contribution from the Government,’ he said. ‘We're confident this assistance will encourage more would be home owners into the market which, longer term, is also key to helping to stimulate movement at all levels of the market,’ he added. He also pointed out that the existing Help to Buy equity loans continue to provide a valuable boost to purchasers of new build homes, enabling people to buy with just a 5% deposit with an equity loan of 20% from the Government, which is interest free for five years. Mortgage advisor Andrew Mannion, of RSC New Homes, one of several mortgage experts who offer advice to Redrow purchasers, also welcomed the introduction. ‘We feel that this scheme will be useful as it will boost a customer's deposit which,… Continue reading
Residential property prices in London up over 10% year on year
House prices in England and Wales increased by 0.4% month on month and 5.6% year on year in October, taking the average value to £186,350, according to the latest data, but much higher in London. On a regional basis London experienced the greatest increase in its average property value over the last 12 months with a rise of 10.6%, well above other parts of the country, the figures from the Land Registry show. The North East saw the greatest monthly growth with an increase of 1.9% while Yorkshire and the Humber saw the lowest annual price growth at 1.4% and the most significant monthly price fall with a decline of 1.8%. Sales and repossessions during August 2015, the most up to date figures available, show that the number of completed house sales in England and Wales decreased by 15% to 74,596 compared with 87,895 in August 2014. Repossessions in England and Wales decreased by 54% to 376 compared with 826 in August 2014 and the region with the greatest fall in the number of repossession sales was Yorkshire and the Humber. The data also shows that the number of properties sold in England and Wales for over £1 million decreased by 13% to 1,280 from 1,473 a year earlier. Adrian Gill, director of Reeds Rains and Your Move estate agents, pointed out that the average price of a home in London is now above half a million and already rising in value much faster than elsewhere across the country. ‘In addition, the reverberations from last year’s stamp duty surprise are still echoing around the market, and million pound property sales have suffered significantly,’ he added. Regarding future price increases, he also pointed out that only time will tell whether the extra 3% stamp duty levy on buy to let and second home buyers will affect the market. ‘In the meantime, there will be a scramble for second home purchases before the April deadline, which will only amp up the existing competition between landlords and first time buyers in the housing market,’ he said. ‘While intending to help more households get that crucial foothold onto the ladder, the Chancellor may find himself responsible for pushing up prices in the short term, and pricing out many prospective homeowners, despite the other initiatives in place. Any hit against the supply of rental homes will hurt tenants’ finances, and delay their realisations of home ownership,’ Gill added. Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes that although the prime central London market seems to be faltering partially due to affordability and last year’s stamp duty changes, the outer boroughs are powering ahead, driven by regeneration in places like Thamesmead and Newham, and of course, the Crossrail effect. ‘This is clear evidence that the UK housing market is incredibly diverse across the regions, highlighting a north-south divide with Yorkshire and The Humber seeing a relatively tiny annual increase. However, the issue of supply still… Continue reading
