Super-rich property owners are costing the government billions in lost tax revenue
Chancellor George Osborne is facing calls to close a loophole which has seen more than £100bn of central London properties placed in overseas tax shelters.
More than one in 20 properties in some areas of central London are held by overseas owners, according to new figures published by The Sunday Times, causing the Treasury to miss out on billions in revenue.
Westminster has the highest number of properties held in offshore tax havens, the inventory of 18,700 title deeds released by the Land Registry for the first time shows, with some 10,233 properties in the borough held overseas.
There are 5,474 properties held in overseas havens in the exclusive borough of Kensington and Chelsea. Some 1,805 properties in Camden are held in overseas tax shelters, while 1,216 are in Hammersmith and Fulham.
Properties held overseas are costing the country billions in lost revenue.
Wealthy buyers can avoid paying five per cent stamp duty on properties worth over £1m, so the owner of a £10m home held by an offshore company could avoid paying stamp duty altogether when they sell, providing they are not a UK resident or domiciled for tax.
A family buying a £1m house in Britain would pay £50,000 in stamp duty, while it would be £20,000 for a £500,000 property.
Owners of highly valuable properties held in overseas tax shelters could also avoid paying inheritance tax when they die, which is charged at 40 per cent.
The taxman does not even need to be told about a property changing hands once it is held by an overseas company.
The Treasury said it had no idea how much it was losing through properties held in overseas tax havens, but experts have estimated it is costing the country £1.3bn a year in inheritance tax and £330m to £500m a year in stamp duty.
Osborne will now be under pressure to close the loophole in the Budget on March 21, or risk upsetting the Conservatives’ coalition government partners, the Liberal Democrats.
Business secretary Vince Cable is already reported to have asked Osborne to act against overseas tax shelters, while Liberal Democrat leader Nick Clegg has repeated his call for a mansion tax to be introduced.
A proposed levy of one per cent would be applied to a property’s value over a £2m threshold, so the owner of a house worth £2.5m would pay £5,000 a year.
Speaking on the BBC’s Andrew Marr Show, Clegg said: “It would ask people who have got very considerable wealth to make a greater contribution.”