New homeowners could be landed with thousands in extra taxes due to lockdown

New homeowners could be landed with thousands in extra taxes due to lockdown

Currently, if a homeowner moves into a new house with their husband, wife or partner, and has not been able to sell a former home first, they have to pay an additional 3 percent stamp duty land tax surcharge on top of the usual rates of stamp duty. The Government rule is aimed at people who buy multiple properties, such as buy-to-let landlords.

However, homeowners can claim a refund as long as they sell their other home within three years of buying the next one.

But research undertaken by Capital Economics suggests at least a quarter of house sales currently in progress will be cancelled affecting thousands of new homeowners.

Meanwhile, the Office of National Statistics say one in ten people are expected to be out of work in the second quarter of 2020 while the number of people claiming benefits has shot up 70 percent.

Chris Etherington, a tax partner at accountancy firm RSM, said: “A significant number of people who were hoping to sell their former homes this year and reclaim the 3 percent surcharge will not be able to do so due to the current lockdown requirements.

“Given that this is not a problem of the individuals’ own making, it feels a particularly penal situation, and it seems unjust for HMRC to benefit when it would otherwise not have done so.

“That deadline could be relevant not only to self-builders who tend to own both properties during the construction phase and benefit a lot from the lengthy window, but perhaps more commonly for couples who have married and moved in together without having sold their previous homes yet.”

In one case, a West Yorkshire couple spent the last three years building a £1.3million home in Leeds but they could be forced to pay £40,000 in extra stamp duty if they cannot sell their old £560,000 house in time.

They said: “We thought we had ample time to sell the property after moving out and it’s been marketed at a sensible price.

READ MORE: Martin Lewis advises whether to buy a home now or wait

Meanwhile, the Royal Institution of Chartered Surveyors’ housing market report, which is used by the Bank of England, reveals house prices could fall by at least 4% in the immediate aftermath of the property market reopening.

Zena Hanks, a partner in private wealth at Saffery Champness, an accountancy firm, said: “Buyers and sellers aren’t able to move on within their respective property chains.

“Even when we do return to some sort of normality, a combination of reduced incomes and reduced confidence is not likely to inspire confidence in people to take on financial commitments.”

Published at Thu, 21 May 2020 15:21:00 +0000