Sur­prise quirk in stamp duty rules turns up the heat on Welsh buy­ers

The Daily Telegraph - Your Money - - FRONT PAGE - Sam Mead­ows

Home buy­ers in Wales have been dealt a tax blow re­lat­ing to the de­vo­lu­tion of stamp duty to the prin­ci­pal­ity’s gov­ern­ment next year. It is un­re­lated to Wed­nes­day’s Bud­get an­nounce­ments, but high­lights the in­creas­ing com­plex­ity of the stamp duty sys­tem.

The group af­fected com­prises buy­ers who own more than one prop­erty and who had been ex­pect­ing to use a loop­hole in the stamp duty reg­u­la­tions to re­place their main home be­fore Novem­ber 2018, and by do­ing so avoid pay­ing the ad­di­tional duty sur­charge. It has now emerged that if they wish to buy a prop­erty in Wales (not else­where) they will need to do so by April 2018, if they are to avoid the extra duty, rather than Novem­ber.

The 3 per­cent­age point sur­charge was in­tro­duced in April 2016 for those buy­ing prop­er­ties in ad­di­tion to their home. A loop­hole meant that any­one who owned mul­ti­ple prop­er­ties – but had sold a main home be­fore Novem­ber 2015 – was given 36 months to pur­chase a re­place­ment home with­out be­ing li­able for the sur­charge.

But in­com­ing changes to the tax regime in Wales mean th­ese peo­ple, who were ex­pect­ing to have un­til Novem­ber next year, must pur­chase their new home by April – a time frame of just four months.

This is the sit­u­a­tion Tele­graph Money reader Phil Wil­liams finds him­self in. The de­signer, aged 53, sold his home in 2008 and has lived in rented ac­com­mo­da­tion in Wrex­ham ever since. He also owns a prop­erty that is rented out. With­out the loop­hole, he would be li­able to pay the sur­charge if and when he buys a re­place­ment home.

He is seek­ing to buy in Wales with a bud­get of £450,000. With­out the sur­charge, this would in­cur a £12,500 tax bill. With the sur­charge he would pay £26,000.

HM Rev­enue & Cus­toms ini­tially con­firmed he had un­til Novem­ber 17 2018 to make his pur­chase. But, in Wales, stamp duty will be re­placed by land trans­ac­tion tax from April.

Mark Drake­ford, the cab­i­net mem­ber for finance in the Welsh As­sem­bly, has now con­firmed that be­yond that date Mr Wil­liams would be li­able to pay the sur­charge, and that the Welsh regime will not recog­nise the pre­vi­ous dead­line.

“Buy­ing a house could take 12 weeks or it could take 12 months,” said Mr Wil­liams. “If I don’t buy soon I’m stuck.”

He said the blow has forced him to con­sider mov­ing to Eng­land: “The irony is if I moved 12 miles to Eng­land I wouldn’t have to pay.”

The Welsh Gov­ern­ment con­firmed that those who sold be­fore Novem­ber 2015 will have to buy a prop­erty by April 2018 to qual­ify for the lower rate. Those who sold after Novem­ber 2015 will have the stan­dard 36 months ex­emp­tion pe­riod.

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