Apparently buyers of some of Britain's most expensive houses are trying to avoid paying the new 5% rate of stamp duty on £1m plus properties thanks to a tax loophole allowing houses and flats to be registered in the names of companies rather than individuals.
The rise in stamp duty is due to come into effect in April this year and means that duty on a home costing £1.5m will rise from £60k to £75k. Some buyers are trying to rush purchases through before the inrease is implemented but the richest buyers have discovered a legal route that almost avoids the tax altogether.
This is done by setting up an offshore company specifically to buy a property. The company buys the home in its name, initially paying the full stamp duty. But when the owner decides to sell the property, he sells shares in the company, rather than the property itself. The transaction is not logged with the Land Registry, enabling the new buyer to take over the property stamp-duty-free. The company shares attracts stamp duty at 0.5%, or sometimes less, instead of the %5 on conventional sales.