Stamp duty avoidance doubles for £2m+ homes

Stamp duty avoidance schemes have doubled since the Treasury hiked the rate for properties worth over £2m in March, research reveals.

HMRC had 10 new stamp duty avoidance schemes reported to it in the six months to November - twice the number reported in the six months before March's Budget - according to research from law firm Pinsent Masons.

The new avoidance schemes flourished after the government raised the rate payable on houses worth more than £2m from 5% to 7% and introduced a 15% levy on properties bought via companies.

The raft of new avoidance schemes highlights the challenge that the government and HMRC face in its bid to clampdown on the practice. On Monday, the Chancellor George Osborne announced an additional £77m for the taxman to employ more staff in a bid to tackle tax avoidance.

One of the new loopholes that HMRC has been made aware of involves homebuyers avoiding the 15% charge by creating an offshore limited liability partnership (LLP).

The scheme works because under UK tax law, an LLP pays no tax, but its members pay tax only on transactions made through the partnership. By using an LLP the buyer pays a 7% levy on purchase but avoids the 15% for buying through a company. Shares in the LLP, rather than the house itself, could be sold to future buyers, thus avoiding stamp duty charges.

Jason Collins, head of tax, at Pinsent Masons, said: 'Stamp duty adds thousands of pounds to the cost of property purchasers for individuals and families at all ends of the income scale. People are quite prepared to risk confrontation with HMRC if they can find a way to avoid it,' he said.

However, the Treasury's drive to clamp down on the most virulent avoidance loopholes had reduced stamp duty avoidance, he added.

0
Be the first to vote

Rate this article

Related Articles
Subscribe