Stamp duty ‘Cupid Tax’ is unfair and flawed

The forthcoming 3% rise in stamp duty could unfairly Stamp-Dutypenalise couples if one of them already owns another property, the Association of Taxation Technicians has warned.

The ATT said that married couples and those in a civil partnership, but not those cohabiting, will be treated as a single unit once the new rules come into effect on 1 April.

This means that if one of the couple already owns a property, any property purchased by the other partner will be subject to higher rates of stamp duty.

Yvette Nunn, co-chair of ATT’s technical steering group, said: “This ‘Cupid Tax’ is both unfair and flawed. The government’s tax on marriage and civil partnerships goes against the principle of legal ownership and risks eroding the foundation of independent taxation if it goes ahead.”

Chancellor George Osborne announced an additional 3% on the stamp duty rate for landlords and second home owners in the Autumn Statement as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers.

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The ATT said it would be simpler and fairer if the rules for charging the higher rate of stamp duty followed the treatment of couples for income tax which taxes them independently.

It believes the proposals will have a serious impact on those in a bridging loan situation, where they have bought their new home but not yet sold their old one.

“The proposed change could mean that some decide to pull out of their purchase which would have a negative effect on the rest of the buyers in their housing chain. We have urged the government to think again on this as it has the potential to stall the housing market. This would go against the policy intention of the measure which is aimed at helping first time buyers get on the property ladder. As we see it, they are the very buyers who may lose out when housing chains collapse if someone further up the chain is caught under these rules,” said Nunn.

“Overall, we believe that the proposed design of this charge will go further and will catch more situations than was originally perceived when George Osborne first announced this measure last November. The proposals as a whole, as set out in the consultation, have too many negatives, in our view,” she added.

 

 

Source: whatmortgage.co.uk

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