Stamp duty: 'Zero likelihood' tax rise for overseas buyers will be scrapped

A tax expert says that there is 'zero likelihood' of the government changing its mind on stamp duty changes for overseas buyers coming into force next year.

From April 1 2021, overseas purchasers will have to pay a 2% surcharge on residential transactions in a bid to level the playing field between domestic and foreign buyers.

There has been speculation that due to the twin uncertainties of Brexit and the Covid-19 pandemic, the government could change its mind about introducing the additional tax.

However, speaking to Knight Frank, Sean Randall, partner at Blick Rothenberg and chair of the Stamp Taxes Practitioners Group, which has been consulting with the government in recent weeks on the overseas surcharge, says any change from the government is at this stage unlikely.

"Discussions have been limited to the technical details and not the policy itself. I sense it is something that international buyers will become increasingly attuned to in the coming months," he says.

The new tax rate for overseas buyers will immediately follow the current stamp duty holiday, which comes to an end on March 31 2021.

Knight Frank's head of UK residential research, Tom Bill, says that overseas buyers purchasing before next April can make significant savings.

"For a £1 million transaction, the combined saving from not paying the 2% surcharge and benefiting from the stamp duty holiday is £35,000," he says.

"For a £5 million property, the equivalent sum is £115,000, while the saving exceeds £1 million for a £50 million transaction."

Bill adds that alongside the stamp duty hike, overseas buyers will have a complex set of considerations to assess in Q4 2020, including Covid-19 travel restrictions, currency fluctuations and the US election in November.

*Graham Norwood is on annual leave, returning on Monday September 21. Conor Shilling will be undertaking editorial duties in his absence. Please send any press enquiries to press@estateagenttoday.co.uk