UK tax changes to impact S'pore property buyers

Recent tax changes in Britain will mean higher stamp duties and other new taxes for some Singaporeans investing in property there. The taxes might be particularly hard on investors who have bought property above £2 million (S$4 million) using a company as opposed to a standard purchase.

A proposed annual charge, for example, will apply both to existing homes and new homes above £2 million held by companies. The charges will likely take effect next April.

The recent budget targeted buyers of homes of more than £2 million who may have dodged stamp duties by making their purchases through overseas firms.

Buyers from Asia and Eastern Europe are thought to have bought most of these high-end homes. They often use offshore companies as it allows for the owner's family to avoid an inheritance tax of potentially 40 per cent, according to British tax and financial adviser The Fry Group.

For instance, as of March 21, the stamp duty on property sold for more than £2 million is 7 per cent, up from 5 per cent. The duty for a company buying such a home has tripled to 15 per cent.

Companies are also expected to be subject to an annual charge ranging from £15,000 to £140,000 for homes above £2 million. In addition, a capital gains tax on non-UK entities is likely to come into force next year.

But foreign investors thinking about new purchases will have more issues to confront.

'We are already seeing an impact with an increase in demand for properties between £1 million and £2 million where you have the normal rates of stamp duty without the annual tax or capital gains tax exposure,' Mr Conder said.

Investors are also considering commercial property, which is not affected by the tax changes.

Source: The Straits Times – 28 May 2012