Taxation of high value UK residential property

The Government has announced the extension of the mansion tax to homes over £500,000 bought through a corporate envelope.

The Chancellor is now using last year's punitive stamp tax on homes bought in 'wrappers' to deter overseas investors who 'buy to leave' and are not investing.

This creates an onerous burden and could have unintended consequences, for example buy to let landlords, funds and housing associations will be exempt from the tax but will still have to complete a tax return, resulting in an extra compliance cost. What's more, because the changes are introduced at different times any owner is going to struggle with getting the tax right.

This regime, which was aimed at collecting taxes, is now seeking to change behaviour. The problem is that now the Treasury can collect mansion tax it could be easily extended to owner-occupied property and this would hit ordinary homeowners hard.