Budget 2020: Property Tax Update


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Budget 2020: Property Tax Update

ATED related matters

Don’t get me started on ATED!!!

This is literally a pointless tax… other than the small matter that it raises cash for the Government.

By pointless, I mean it no longer has a reason to live.

ATED was introduced in 2012 as a measure to prevent, and penalise, non-UK domiciled individuals who had ‘enveloped’ UK residential property as means of preserving the value inside the entity from UK inheritance tax (“IHT”).

However, in April 2017, such property has been brought in to the UK IHT net as a result of amendments to the definition of so-called ‘excluded property’ for IHT purposes.

As such, ATED is a completely redundant. As a result of the 2017 changes, those who have ‘enveloped’ their properties are in a worse position than those who have not because (1) their properties are within the UK IHT net; and (2) they have to pay an annual tax under ATED.

I recall a recent ‘call’ for how the UK tax system could be improved. The repeal of ATED would seem a sensible step (and a small one towards the undoubted need for simplification in our overblown tax code).

But I digress. There were two ATED related matters in Budget 2020:

  • Annual chargeable amounts for the 2020 to 2021 chargeable period: ATED charges will rise by 1.7% from 1 April 2020 in line with the September 2019 CPI;
  • Relief for housing co-operatives: New reliefs from ATED (and the 15 per cent rate of SDLT) will be introduced for certain qualifying housing cooperatives.

Non-UK resident Stamp Duty Land Tax surcharge

Yonks ago, Budget 2018 to be precise, a consultation was announced regarding the introduction of a Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property.

We will now see legislation in Finance Bill 2020-21 providing for a 2% surcharge. This will take effect from 1 April 2021.

Where contracts are exchanged before 11 March 2020 but complete or substantially performed after 1 April 2021, then transitional rules may apply.

My view is that the Government is taking liberties here. Our swingeing property taxes have replicated faster than Coronavirus over the last decade.

Capital Gains Tax private residence relief: reform of ancillary reliefs

These previously announced, and discussed changes, will be introduced without further changes

If you have any property tax queries, or any tax queries at all, then please do get in touch.

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