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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
Sales to first time buyers up in the UK, latest estate agent data shows
The number of sales made to first time buyers in the UK rose for the second month running, to the highest level in six years, according to the latest housing market report from the National Association of Estate Agents (NAEA). The October report show that there was an average of nine sales made per estate agent branch in total and 31% of these sales were to first time buyers. Last month, the group accounted for 29% of all sales, and in August just 20%, showing an 11% jump in just two months. ‘It’s really promising that, for the second month running, the number of sales being made to first time buyers has risen. Competitive mortgage products and the increasing pressure of an interest rate rise could be encouraging first steppers to take the plunge, as well as the dwindling supply of rental housing stock, putting pressure on renters to buy,’ said Mark Hayward, NAEA managing director. The report also points out that the supply of available housing increased in October, ahead of the Christmas slowdown. The number of properties available to buy per branch increased by 16% from 37 in September to 43 in October. On the other hand, demand for property dropped slightly from an average 342 house hunters per branch in September, to 336 in October. ‘Although it is great to see supply growing and demand falling, albeit by just 2%, we cannot rest in the knowledge that the housing market is on the ‘road to recovery’. What we’re seeing is a seasonal uplift,’ said Hayward. ‘Those selling their homes are keen to push through sales before Christmas, hence the uplift in properties entering the market but with the average sale taking between nine and 12 weeks, it’s unlikely transactions will be pushed through before Christmas now. Buyers are holding off until January to kick off the New Year with a house hunt,’ he explained. ‘The only way we can attempt to repair the market is simply by building more houses. Osborne’s pledge last week to build 200,000 new and affordable starter homes, with a discount for those under the age of 40, and his promises to offer loans to small builders, reform the planning system and re-designate commercial land to build new homes are all a step in the right direction. But until it’s all put into motion and we see the walls of new properties going up, we’re not holding our breath,’ he added. Continue reading
Home renovations sector in Australia seeing a slow recovery, says new report
The home renovations sector in Australia is being held up and frustrated by the hesitant pace of the current real estate market, according to a new report. The comprehensive review of the country’s renovations market from the Housing Industry Association shows that the current recovery has been slow since the slump in activity between 2011 and 2013. Indeed, the hesitant pace of the current recovery is mainly due to patchy consumer sentiment and challenging labour market conditions in several states, according to HIA senior economist Shane Garrett. . ‘Dwelling price growth is also pretty unspectacular in a number of important markets,’ he said, adding that there is considerable geographic variation. The report says that demand for renovations in New South Wales has been greatly boosted by the strength of prices. Many Sydney households that had been planning on moving house find that it is now much more affordable to undertake a major renovations job instead. ‘Australia’s home renovations market is a major strand of consumer spending and will be worth just under $30 billion this year. Its labour intensive nature means that it has substantially positive knock-on effects for employment,’ said Garrett. ‘Over the coming years, the modest recovery will continue. This will be spurred on by very favourable interest rate settings as well as improvements in economic growth and the labour market over the medium term. However, the recent tightening of mortgage credit conditions casts an unwelcome shadow,’ he explained. The Spring 2015 edition of the HIA’s Renovations Roundup projects that renovations activity will increase by 3.9% this year with a slight 0.4% increase forecast for 2016. The HIA is forecasting that activity will grow by 0. Continue reading
