Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Currencies

Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Categorized | Property

Osborne reaps rewards from ‘enveloper’ tax


Posted on July 31, 2014

Chancellor George Osborne©Bloomberg

Chancellor George Osborne

In 2012, George Osborne, the UK chancellor, jacked up taxes on people who used companies to buy expensive residential property.

This was an effort to crack down on stamp duty land tax avoidance, which he described as “a major source of abuse”.

    Rules imposing a 15 per cent rate of stamp duty were placed on “enveloped properties”, (properties held through a company). The following year, an annual tax – ranging from £15,000 to £140,000 a year – was also introduced.

    In the latest Budget, the Treasury raised the rates and widened the scope of the tax, so it now affects properties valued at £500,000 or more.

    Treasury officials initially expected that few people – just 1,100 – would pay the new annual tax because they believed that the measures would deter people from buying “enveloped” property to escape stamp duty. It was originally expected to bring in £35m a year, together with the 15 per cent of stamp duty land tax.

    But it has raised far more than expected. The latest data show the annual tax alone has brought in £198m over the past 10 months. HM Revenue & Customs said it was too early to draw conclusions, but it was possible “enveloping is more prevalent than was first thought”.

    Advisers said a lot of property owners had decided against “de-enveloping” their properties. Some wanted to preserve their anonymity but, for many, the biggest factor in their decision was wanting to avoid triggering a capital gains tax charge – 28 per cent of the gain – when they removed the property from the structure.

    Inheritance tax planning is another consideration for many older non-residents and non-doms (wealthy foreigners living in Britain who keep their foreign income outside the UK tax net).

    Many non-doms put their assets in an offshore company before they reach the cut-off point – 17 years – after which they come under normal inheritance tax rules. Removing the property from its corporate envelope would expose it to inheritance tax, increasing death duties.

    The new taxes have damped but not destroyed the appeal of holding property through a company. But it has affected the market, according to Lucian Cook, residential research director at Savills.

    “The taxation had the effect of tempering price growth in the residential market”, he said.