In recent article posted to our Informanagement news feed, we reported on surprising outcomes for home owners moving to a new house in the Wales/England or Scotland/England border areas.
In certain circumstances the differences in stamp duty payable can be significant. For example:
Consider Llanymynech, a village that straddles the border between Powys (Wales) and Shropshire (England). The amount of stamp duty payable on an identically priced house, say £179,000, would cost the buyer £1,080 in Stamp Duty Land Tax if bought in the English side of the village, but no Land Transaction Tax would be payable for an equivalently priced house in the Welsh side of the village. A definite incentive to buy in this price bracket the Welsh side of the border.
If you live in the Scotland/England border areas and you are contemplating the purchase of an expensive property and your budget is £1m, you may want to consider the following numbers:
- Buying in Scotland would cost you £78,350 in Land Transaction Tax, and
- Buying in England would cost you a mere £43,750 in Stamp Duty Land Tax.
These regional variations in taxes are set to become a planning feature for practitioners especially if the Scottish Income Tax rates start to drift further from the rest of the UK’s rates.
Tax software providers must be pulling their hair out as our already complex tax code is now coloured by regional differences.
Accountants who practice in the border areas of northern England and Scotland must be similarly bemused. As residence is the deciding factor for Scotland’s Income Tax, firms may need to recalibrate their planning options to include a determination on where their clients would be better placed to buy a home, north or south of the border.