Property investors are likely to be hammered by the new stamp duty rules rushed in by Chancellor George Osborne.
Osborne announced the 3% surcharge on buying a residential property for use other than as a main home in his Autumn Statement 2015.
A hasty consultation period has followed – with the details published on December 28 and the consultation due to close on February 1.
The new rules will come into force at the start of April 2016.
Tax professionals are suspicious the new law will trap thousands of unwitting taxpayers because the wording in the consultation is poorly drafted.
Unintended consequences for home buyers
The targets of the measure are buy to let landlords.
Adding a 3% stamp duty to property purchases over £40,000 is likely to hit thousands of homebuyers, not just landlords, according to tax experts UHY Hacker Young.
Tax director Graham Boar explained the wording of the consultation is so woolly that the new rules could extend to any UK taxpayer buying a property overseas as a second home or a rental.
“It’s the law of unintended consequences for property buyers,” he said. “The government needs to make absolutely clear who this law applies to.
“In some places the long and complicated consultation document says only properties in England and Wales are affected, and in others mentions homes anywhere in the world may be taken into account.
Foreign home buyers
“The proposals seem rushed and full of holes and this sort of doubt could mean people paying the tax who do not need to.”
Around 35,000 British taxpayers buy homes overseas each year, so if the rules extend beyond the UK shores, a significant number of people could be affected.
The new stamp duty could net other property buyers as well, such as parents helping their children on to the property ladder or families providing a home for less well-off parents or relatives.
Owners of these uncommercial lets already miss out on tax breaks for running costs and repairs but have to pay capital gains tax when they sell.
“We don’t know exactly how this proposal will look until government releases the next round of documents, and it could be shelved judging the way the consultation has gone,” said Boar.
