HMRC has confirmed its plans to add a further 2% Stamp Duty to properties bought by foreigners following a six-month consultation on the proposal, and has published the draft legislation.
It says many of those responding to the consultation on the measure, which was announced by Chancellor Rishi Sunak within his Spring Budget this year, welcomed the government’s underlying policy objective of supporting home ownership, with a number believing the surcharge would support this objective.
But the announcement has prompted criticism from many London prime agents, and HMRC says its consultation responses included warnings that the surcharge will negatively impact housing supply and affect the UK’s reputation as a destination for international investment.
Trevor Abrahmsohn (left) of Glentree Estates recently called the measure ‘daft’ and has predicted it will reduce the flows of property investment and spending in the UK by non-residents.
Sunak originally announced the 2% additional Stamp Duty for England and NI non-residents in his Spring budget.
It is projected to raise £600 million over the next two years, although HMRC says it will cost £2.71 million to implement.
Those due to pay the tax will be non-residents, namely those who spend less than 183 days a year living in England or Northern Ireland, although HMRC admits the complicated tax rules around residency status means some people may be due refunds if they pay the extra surcharge but later discover they are technically resident in the UK.
Industry respondents to the consultation included NAEA Propertymark, the British Property Federation, the House Builders Federation and Ludgrove Property.