The Budget briefing machine has been cranked up to full speed over the weekend, with George Osborne pledging ‘aggressive’ measures to crack down on stamp duty avoidance schemes.
He described the practice of buying a residential property through a company, in order to avoid or reduce the level of stamp duty paid, as ‘unacceptable’.
Here at Informed Choice we have been approached on numerous occasions in recent years by accountants who want us to promote these stamp duty avoidance schemes to our clients. We have always refused to participate and have remained very suspicious about the loophole exploiting mechanics behind such schemes.
Where clients have approached us for an opinion on these schemes, we have advised against them due to the risks of a retrospective legislation change and lack of an available refund for the very high professional fees involved.
Stamp duty on residential property starts at the rate of 1% on property values over £125,000. It is applied at the rate of 5% on properties costing over £1m.
It is typically for these higher value property purchases, which are largely in London and the South East, where the risks of using stamp duty avoidance schemes can sometimes appear to be outweighed by the potential benefits.
A quick search on Google this morning reveals numerous websites set up to generate enquiries about stamp duty avoidance schemes for people buying high value property.
The Budget on Wednesday could see those individuals who have used such schemes facing a punitive tax charge. If those who have promoted such schemes have failed to point out all of the risks involved, this could result in advisers facing sanctions from their professional bodies.
Photo credit: Flickr/Jayel Aheram