Budget 2012: Inheritance Tax, Not Stamp Duty, Will ‘stalk the Streets of Chelsea’
It is likely that the stamp duty charges outlined in the 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.”