Expats looking to move back to the UK after Brexit could find themselves hit with an expected property tax bill, an accountant has warned.
At the end of September Prime Minister Theresa May promised the Conservative party would introduce a new surcharge to be levied on top of all other stamp duty payable on second home and buy-to-let purchases.
Stamp duty starts at 3 per cent for homes valued less than £125,000, increasing to 5 per cent for homes worth between £125,000 and £250,000 and 8 per cent for homes worth up to £925,000.
Wales and Scotland have different rules on stamp duty.
The government stated it will consult on the precise details of the plan, but Mrs May said the additional tax charge on top of stamp duty would apply to “foreign buyers” and was a move “to help UK taxpayers buy a property.”
But George Bull, partner at accountancy firm RSM, said he feared it wasn’t just foreigners who will be hit with the extra tax charge.
He said people who have moved abroad who want to move back to the UK in the aftermath of Brexit could face this additional tax charge too as he feared they would be deemed non-UK residents.
Mr Bull said: “The headline writers have portrayed this as a tax on ‘foreigners’ buying property here but citizenship is not a concept which has relevance to UK taxation.
“Others have said that the charge will apply to those who ‘do not pay tax in the UK’. And the Conservative Party’s official Tweet says ‘we will apply a higher rate of stamp duty for non-UK residents’. These are all subtly different tests.”
When asked to clarify would expats face Mrs May’s proposed charge, a spokesman for HM Treasury said: “The Prime Minister has announced that foreign buyers looking to buy homes in the UK will face a higher stamp duty rate.
“We will consult on the details in due course.”
According to Mrs May, the cash raised by the extra tax charge will be used to fund services for the homeless.
She said: “Currently foreign buyers can purchase homes in the UK as easily as people who live here but there is evidence this is inflating house prices.
“At Conservative conference last year, I said I would dedicate my premiership to restoring the British Dream, that life should be better for each new generation, and that means fixing our broken housing market.
“Britain will always be open to people who want to live, work and build a life here.
“However it cannot be right that it is as easy for individuals who don’t live in the UK, as well as foreign-based companies, to buy homes as hard working British residents.”
Brian Hill, of advice firm Jones Hill, said: “I would expect the impact of this would be marginal because the majority of overseas buyers in London wouldn’t blink twice at an increase in stamp duty.
UK expats returning ‘home’ are more likely to rent until they become UK residents, in which case stamp duty wouldn’t impact them in the same way as if they were non resident.
This is more of an attempt to curry favour with people who are struggling to buy a home, particularly in London, where they are often outbid by wealthy overseas investors. It’s unlikely Theresa May would go as far as the New Zealand government’s total ban that came in August.”
Source: FT Adviser