March 19, 2014 / 2:50 PM / 3 years ago

UPDATE 1-UK clamps down further on property purchases made through firms

2 Min Read

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LONDON, March 19 (Reuters) - Britain on Wednesday expanded the pool of residential properties eligible for higher taxes if bought through a company, an attempt to allay voter concern that deep-pocketed foreign buyers are using firms to compete with locals to buy homes.

Finance Minister George Osborne said that Britain would increase stamp duty to 15 percent on company purchases of residential properties worth more than 500,000 pounds ($828,700).

In 2012, Britain introduced stamp duty of up to 15 percent for purchases of more than 2 million pounds through a company.

"We are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company," Osborne said in his annual budget speech to parliament .

"From midnight tonight, anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15 percent stamp duty."

Buyers who are purchasing the property to be rented out would however not be affected by this change, he said.

An annual charge levied on properties worth over 2 million pounds would also be extended to those worth over 500,000 pounds, though its introduction will be staggered over the next two years to avoid burdening genuine rental and development companies, the Treasury said.

"The government is extending it now clearly to ordinary overseas people who are buying properties...Clearly he wants to free up those houses for people based in the UK," said Ros Rowe, head of property tax at PricewaterhouseCoopers.

"He's done a hit at the top, mansion level which is all about stamp duty avoidance, and this is about changing behaviour." ($1 = 0.6034 British Pounds) (Reporting by Brenda Goh; editing by Guy Faulconbridge)

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