Wednesday 21 March 2012
It is likely that the stamp duty charges outlined in today’s Budget (15% on properties over £2 million bought via a company) will hit the high end London property market as well as costing wealthy investors more, according to David Kilshaw, tax partner at KPMG.
David said: “Most overseas nationals bought their UK property via a company not to save the relatively modest stamp duty but to avoid inheritance tax. Whereas stamp duty would be £1 million on a £20 million home, that paled into insignificance when compared to the 40% inheritance charge which would be £8 million on death.
“Now a company is not as attractive—the stamp charge rises three fold to over £3 million. There will also be an annual levy of up to £140,000.
“This changes the dynamics: overseas nationals may now decide to buy elsewhere where they are not exposed to death duties . Life insurance to cover the inheritance tax exposure will, however, become more popular –a minor boom for the insurance industry.”
David Kilshaw concluded:
‘’Inheritance tax will now stalk the streets of Chelsea. This could change the whole dynamics of the London property scene. Overseas investors may now think twice before they buy in London . For overseas nationals, this is a mansion tax with a capital M.‘’
Follow us on twitter: @kpmg_uk_llp #budget2012
For further information please contact:
KPMG Press office
Tel: +44 (0) 207 694 8773
Mark Hamilton, KPMG Corporate Communications
Mobile: 07785 337672
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.