Stamp Duty Is Too Confusing And Unfair, Claim Tax Experts

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Tax experts have slammed the government’s new stamp duty surcharge for non-residents as unfair on expat couples.

The new rules call for non-residents to pay an extra 1% stamp duty on house purchases in England and Northern Ireland, but a Brexit logjam in Parliament means ministers cannot name a day for the changes to take effect.

But the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT) have both criticised the planned measure.

They point out that expat couples with one partner on assignment overseas and the other living in England or Northern Ireland must pay the surcharge even though only one is non-resident.

Although a refund process is available should a non-resident return shortly after a purchase, they say the tax is confusing and means expat couples will have extra costs when buying a home.

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Expat couples impacted

The measure will not apply to Scotland or Wales as both countries have their own separate stamp duty taxes for buying a home.

Michael Steed, co-chair of the ATT’s technical steering group, said: “We are concerned that the proposal will have an impact beyond non-UK resident investors, and is not in line with the policy aim of helping UK residents to get on the housing ladder.

“Under the proposal, the additional rate will apply to joint purchases of property if either of the purchasers are non-UK resident. This means that the measure will affect couples who wish to purchase a house together in the UK, with one of them intending to live in it immediately but the other currently living or working abroad.

“In addition, a couple who currently own a home in the UK, but where one party already works abroad, will be affected if they move to a new house and the non-resident spouse remains working overseas. While they could avoid the issue by buying only in the name of the UK resident spouse, this may not be practical for mortgage purposes nor be what the couple wish.”

Too much tinkering with rules

Commenting on the refund process, Steed explained the ATT considered the window for reclaiming stamp duty was too short.

“Individuals looking to return to the UK who acquire property more than six months in advance of their return will also be unable to obtain a refund of the extra SDLT that they had been required to pay,” he said.

CIOT argues ministers have tinkered too much with stamp duty and that the rules are too confusing.

Brian Slater,  chair of CIOT’s property taxes sub-committee, said: “We are concerned at the increasing complexity of tax rules that touch on residential property. Stamp Duty Land Tax  has been the subject of technical change in virtually every year since its introduction in 2003.

“ The complexity of SDLT will be compounded by the planned one per cent surcharge. We urge the government to refrain from making further changes before the impact of recent changes to the taxation of residential property are assessed and the evidence base for the surcharge is evaluated fully.”

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