New, extra 3% Stamp Duty on BTL?

New, extra 3% Stamp Duty on BTL?

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Discussion

Ginge R

Original Poster:

4,761 posts

218 months

Thursday 26th November 2015
quotequote all
The Treasury is consulting if SDLT+3% guidance will apply to homes held in other countries. Looks like that little dodge is going to be cut off at the pass.

Mr Noble

6,535 posts

232 months

Thursday 26th November 2015
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Another issue would be for people moving house into a new PPR that requires work/bridging loan/etc.

My neighbour is on the hunt for a new home and has found one that they intend to buy and do up for about 6 months, then move into it and sell their old PPR. They don't have any other properties, so would the new purchase be deemed as a 2nd home and incur the 3%? (obviously not till April 2016, but you get my point...)


There are many points of clarification required with this new tax.


princeperch

7,911 posts

246 months

Thursday 26th November 2015
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I presume you'll get the extra 3pc entrance fee back when you work out what you are offsetting when working out your exit fees for CGT purposes if and when you sell tho, right?

Welshbeef

49,633 posts

197 months

Thursday 26th November 2015
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Ginge R said:
The Treasury is consulting if SDLT+3% guidance will apply to homes held in other countries. Looks like that little dodge is going to be cut off at the pass.
But honestly how can the UK govt confirm that you do or do not have a holiday home anywhere overseas? Let's say it's not rented out ever so it's purely a holiday home. Would be impossible to trace oven govt resources.

okgo

37,860 posts

197 months

Thursday 26th November 2015
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So if I own a place now that I want to keep on and rent out when I buy a larger house the only way to do it without incurring this 3% increase, which will hurt at the level I will be buying at, is to sign the current place to either me or my partners name (unmarried)?


Eric Mc

121,785 posts

264 months

Thursday 26th November 2015
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Welshbeef said:
Ginge R said:
The Treasury is consulting if SDLT+3% guidance will apply to homes held in other countries. Looks like that little dodge is going to be cut off at the pass.
But honestly how can the UK govt confirm that you do or do not have a holiday home anywhere overseas? Let's say it's not rented out ever so it's purely a holiday home. Would be impossible to trace oven govt resources.
It's called "Self Assessment". It's a criminal offence to hide relevant information from HMRC. Many people do - especially regarding owning properties. What you won't want is a letter from the "Let Properties Unit" of HMRC. I've seen what can happen when they rumble that someone has not been truthful about their property portfolio.

Eric Mc

121,785 posts

264 months

Thursday 26th November 2015
quotequote all
okgo said:
So if I own a place now that I want to keep on and rent out when I buy a larger house the only way to do it without incurring this 3% increase, which will hurt at the level I will be buying at, is to sign the current place to either me or my partners name (unmarried)?
I am pretty sure that if you already have a property that you will subsequently rent out, any second property you buy as your main residence will NOT be subject to the SDLT levy.

Of course, if you subsequently decide to let THAT property out later on, what will HMRC do? Will they chase you for unpaid SDLT years down the line?

There is a lot of nitty gritty detail that will need to be hammered out and revealed about this new SDLT levy. It's not going to be straightforward at all.

keith333

370 posts

141 months

Thursday 26th November 2015
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Does it apply in Scotland as we have our own stamp duty rates?

2Btoo

3,410 posts

202 months

Thursday 26th November 2015
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Eric Mc said:
It's not going to be straightforward at all.
Understatement of the month. It's going to be spectacularly messy.

This smacks of overly-complicated knee-jerk legislation that creates nothing other than confusion. Just the behaviour I associated with the Labour government when they were in power, and something I disliked intensely.

Welshbeef

49,633 posts

197 months

Thursday 26th November 2015
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Eric Mc said:
Welshbeef said:
Ginge R said:
The Treasury is consulting if SDLT+3% guidance will apply to homes held in other countries. Looks like that little dodge is going to be cut off at the pass.
But honestly how can the UK govt confirm that you do or do not have a holiday home anywhere overseas? Let's say it's not rented out ever so it's purely a holiday home. Would be impossible to trace oven govt resources.
It's called "Self Assessment". It's a criminal offence to hide relevant information from HMRC. Many people do - especially regarding owning properties. What you won't want is a letter from the "Let Properties Unit" of HMRC. I've seen what can happen when they rumble that someone has not been truthful about their property portfolio.
The part you missed from the above is NOT LET or rented ever simply a personal holiday home.

We don't get the allowance to remove the overseas taxes from our self assessment if it's just another personal residence so to slap on 3% is nuts.

Shaoxter

4,048 posts

123 months

Thursday 26th November 2015
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Eric Mc said:
okgo said:
So if I own a place now that I want to keep on and rent out when I buy a larger house the only way to do it without incurring this 3% increase, which will hurt at the level I will be buying at, is to sign the current place to either me or my partners name (unmarried)?
I am pretty sure that if you already have a property that you will subsequently rent out, any second property you buy as your main residence will NOT be subject to the SDLT levy.

Of course, if you subsequently decide to let THAT property out later on, what will HMRC do? Will they chase you for unpaid SDLT years down the line?

There is a lot of nitty gritty detail that will need to be hammered out and revealed about this new SDLT levy. It's not going to be straightforward at all.
I'm in the same situation, and it seems like a lot of things which need to be clarified in the short space of time before it comes into effect. I've exchanged contracts already and estimated completion date is April 2016 (it's a new build). An extra 3% is not something I would have the budget for!!

Eric Mc

121,785 posts

264 months

Thursday 26th November 2015
quotequote all
Welshbeef said:
The part you missed from the above is NOT LET or rented ever simply a personal holiday home.

We don't get the allowance to remove the overseas taxes from our self assessment if it's just another personal residence so to slap on 3% is nuts.
I'm not sure what you are saying as your sentence is a bit garbled.

If you are receiving rental or holiday let income from a foreign property and you are a UK tax resident, you are obliged BY LAW to declare that income to HMRC and pay whatever UK tax is due on it. IF you are suffering foreign income tax on this income, as long as the country has a Double Taxation Agreement with the UK (which is most countries) you will receive a credit for the foreign tax paid.

Welshbeef

49,633 posts

197 months

Thursday 26th November 2015
quotequote all
keith333 said:
Does it apply in Scotland as we have our own stamp duty rates?
Very interesting point.

What if your PPR is in Scotland and all B2L or vice versa?
Where would the extra tax raised go Scotland or England and how would you determine which?


Jonesy23

4,650 posts

135 months

Thursday 26th November 2015
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This stinks of a typical Treasury 'simple' idea having a collision with reality.

It's one thing to decide to tax BTL and additional homes but as people are working out there are a lot of edge cases that make it impossible to get this to work fairly. Say for example coping with a situation in a chain where you end up bridging: do you pay the extra 3% just because of a transient situation?

The 3% is also far too high a number. A sliding scale might have worked better (0 on first additional ie. 2nd home then a small increment for each one after that) as you avoid catching normal transactions/situations but discourage portfolios, assuming that was the intent.

I suspect this will be reworked or maybe even kicked down the road once a bit of reality creeps in. There is something of a history of U turns building up.

Edited by Jonesy23 on Thursday 26th November 12:14

Dromedary66

1,924 posts

137 months

Thursday 26th November 2015
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Is this something that MPs will get to vote on or is that bypassed. I expect nearly all of them have multiple houses.

The Beast of Codfin

101 posts

100 months

Thursday 26th November 2015
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Dromedary66 said:
Is this something that MPs will get to vote on or is that bypassed. I expect nearly all of them have multiple houses.
I don't think you understand how stamp duty works.

Dromedary66

1,924 posts

137 months

Thursday 26th November 2015
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The Beast of Codfin said:
I don't think you understand how stamp duty works.
No I get it but when they leave parliament they usually flog the london pad and, I expect, buy another one somewhere else...

Skyedriver

17,667 posts

281 months

Thursday 26th November 2015
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Welshbeef said:
keith333 said:
Does it apply in Scotland as we have our own stamp duty rates?
Very interesting point.

What if your PPR is in Scotland and all B2L or vice versa?
Where would the extra tax raised go Scotland or England and how would you determine which?
If anyone can advise please.
We are currently trying (and failing) to sell our old home on the Isle of Skye, where many properties actually sell as second homes.
This SD increase will make the sale even less likely.
Think we'll just move back up there, cheapest Council Tax, quietest roads...

andy43

9,552 posts

253 months

Thursday 26th November 2015
quotequote all
2Btoo said:
This smacks of overly-complicated knee-jerk legislation that creates nothing other than confusion. Just the behaviour I associated with the Labour government when they were in power, and something I disliked intensely.

Welshbeef

49,633 posts

197 months

Thursday 26th November 2015
quotequote all
Eric Mc said:
Welshbeef said:
The part you missed from the above is NOT LET or rented ever simply a personal holiday home.

We don't get the allowance to remove the overseas taxes from our self assessment if it's just another personal residence so to slap on 3% is nuts.
I'm not sure what you are saying as your sentence is a bit garbled.

If you are receiving rental or holiday let income from a foreign property and you are a UK tax resident, you are obliged BY LAW to declare that income to HMRC and pay whatever UK tax is due on it. IF you are suffering foreign income tax on this income, as long as the country has a Double Taxation Agreement with the UK (which is most countries) you will receive a credit for the foreign tax paid.
I'll try again

You have an overseas property
You never have and never will receive rental or let income as it is a holiday home only and you are not going to let it out.
There is nothing to declare - how would the Govt ever know you had such a property?


Personally I have 2 overseas properties one rents out the other we will never let it out it is our place so all of our stuff in there and in theory I could live there if I so wished. I pay local income tax on the rental and declare all on my self assessment as you rightly say given the country where they are based has a tax agreement with the U.K. Double taxation relief is an allowance (online form does this all for you).

However would they be classified as B2L? They are not part of he UK not preventing any UK local from purchasing or upping demand. If they are then if you'd never had any income nor ever would why or how would the govt know you had it? They wouldn't but if they did does the 3% kick in?