The number of offers made on UK properties above £5 million declined by 18% in the year to September, data from property agent shows
Prime home sales have slumped in the run up to the Budget as non-doms mull their options, according to Knight Frank.
The number of offers made on UK properties above £5 million declined by 18% in the year to September, data from the property agent shows.
By contrast, home sales over £2 million dropped by just 5%, over the same period.
The firm points out that stamp duty on sales above £2 million accounted for 22% of the £11.7 billion raised last year, “which is something the government may want to consider” as Chancellor Rachel Reeves completes her 30 October Budget.
Knight Frank head of UK residential research Tom Bill says the government’s tax treatment of the country’s 74,000 non-doms is “one reason for the recent hesitancy in super-prime property markets”.
The Labour Party manifesto has pledged to increase the stamp duty surcharge paid by non-UK residents by 1%, raising £40 million over five years. These rates are currently 2% points higher than those that apply to UK residents.
But Bill says: A four-month delay between the election and the Budget has given the government time to consider the ramifications of its original plan for non-doms.
Before July’s general election, Labour pledged to toughen existing Tory plans to abolish non-dom tax status.
Labour said it would remove a 50% discount for non-doms bringing foreign income into the UK in the first year of the new rules.
It said it would also include foreign assets held in a trust within the UK inheritance tax framework.
The moves were intended to raise an additional £1 billion to fund public services, but there are doubts whether the changes will generate as much money as hoped.
There is concern the changes could prompt wealthy foreigners to simply leave the UK.
Lobby group Foreign Investors for Britain has petitioned Labour to widen its proposals by introducing a tiered tax regime for non-doms.
Under this scheme, individuals would pay an annual amount based on their net wealth, which in turn would protect them from UK taxation, including inheritance tax, on overseas income.
Knight Frank points to an Oxford Economics survey, which found that 98% of non-doms would speed up their emigration plans under the current proposals, a figure that would drop to 13% if a tiered tax regime was introduced.
