Commercial Property Blog
All posts tagged: stamp duty
I recently met with Rory Mullan, a leading tax barrister and member of Tax Chambers, 15 Old Square, at 28-50 to discuss Stamp Duty Land Tax avoidance schemes, over a few glasses of fine wine.
28-50 is recently-opened wine bar and restaurant named after the latitude coordinates 28° and 50°, these being the locations between which the majority of the world’s vines grow.
The principals behind the business, formerly of Manoir Aux Quat Saisons and Gordon Ramsay, Royal Hospital Road, chose a location somewhere around latitude coordinate 51° (Fetter Lane in the City) so I didn’t have far to travel from my office on Piccadilly.
We opted for a Shiraz flight from Glaetzer Wines, a relatively modern producer from the Barossa, whose owners have a long history of wine production in South Australia.
As Shiraz can often exceed 15% ABV, I thought it sensible to start with a charcuterie selection so as not to become too insensible too soon.
In hindsight, I should have opted for something more exciting from the menu such as Icelandic cod with chorizo and cous cous; perhaps next time.
The first wine (Wallace 2008) was surprisingly pale for a Shiraz, in particular for 2008 as Barossa was on the receiving end of a fierce heatwave. A bit of cheating (a bottle inspection) revealed that Wallace is a blend of Shiraz (80%) and Grenache (20%).
This explained the difference in colour between the medium purple core of the Wallace 2008 and the near-opaque dark purple core of the second wine Bishop 2008 (100% Shiraz).
The Bishop 2008 stood out: a complex nose packed with dark fruit; complexity again on the palate, dark fruit, pepper, sweet spices, leather and tobacco; silky tannins; and a good finish. At £8.30 a glass (125ml), I was impressed.
More cheating revealed that the Shiraz vines at Glaetzer average 80-120 years which explains the wine’s complexity. The struggle older vines face to produce grapes results in richer, more interesting fruit, albeit less of it.
The final wine Bishop 2007 was pleasant but our preference was the 2008. The conversation turned from wine to tax (again). This might sound boring but I am yet to meet a property investor who finds the subject of legitimate tax avoidance uninteresting; in particular, over a glass of Australia’s finest.
‘Vote for change,’ scream the Tory banners, with airbrushed-Dave peering down creepily like the ghost of Gareth Gates.
‘The choice,’ we’re told, is of ‘five more years of the same pants, or queuing up in M&S to buy some new ones.’ And you know how long the queues are in Marks since they brought in the self-service tills.
Change though, is what we got in yesterday’s Budget.
‘I’m gonna change the definition of strong cider,’ Darling proclaimed, like Moses bellowing out the six commandment. Expect it to be like when the chancellor changed the definition of ‘ATM’ and ‘public toilet’ to become an ‘empty property’ when offering rate relief in response to the award-winning campaign I jointly coordinated with Property Week.
Apart from much electioneering and some light fiddling of the figures, there was Scrumpy Jack in this Budget of any real substance. In truth, the whole thing was Tab Clear (Coke’s filthy clear cola). Remember that?
And as so many have done in times of despair, let’s turn to the Smiths for our Budget analysis as we apply the title of one of their early hits, What Difference Does It Make?, to some of the key announcements.
‘We have been through hell and high tied,’ Morrissey moans throughout. And he’s right, but things are getting better though: the national deficit is ONLY £167bn down from £178bn. Get in! I don’t know about you, but any number where the noughts resemble using an x-ray to peer into a tube of Smarties means nothing.
So let’s try some other figures and see what other Smiths song titles fit the order of play.
A Rush And A Push And The Land Is Ours
Inheritance tax is to be capped at the current threshold of £325,000, or rather, it will be pegged to September’s inflation rate like so many other bits of the economy. It was one of several deep political dividing lines drawn yesterday, but given you only pay it when you die, what difference does it make?
William, It Was Really Nothing
The look on Hague’s face when the crackdown on Belize was announced was priceless. It is a shame though that this was probably the highlight of Darling’s career. I’m of course referring to the three new tax treaties announced yesterday which will probably raise a few quid to pay for Liam Byrne’s latte’s and head polish. But given that most people don’t invest in a fund in some hard-to-find country, what difference will it make?
Sweet And Tender Hooligan
Official figures claim there’s around 1.8m people not working, compared to 4m last time around. Clearly they’ve not counted all the RBS and Lloyds property guys sitting on their hands, although a few dozen of them were out ‘working’ at Mipim. Lazy teenagers will now be ‘guaanteed’ training or ‘work’, according to Darling, in a statement that has strangely slipped by the media’s stupid filter. As the recent BBC documentary by Evan Davis (‘The Day The Immigrants Left’) showed, British people are, on the whole, lazy and stupid, leading one to ask of this measure – what difference will it make?
Barbarism Begins At Home
Hosing benefit will be capped at £1,100 to stop poor people living in posh areas apparently saving £50m a year by 2014-15. Of course this ignore the fact that the people who own their homes in these plush neighbourhoods will still want cleaners, and other low-paid jobs will still need to be filled. If people who have lived there on benefits for years are forced out, who will do these jobs? Benefit in this country is over £17.4bn – but what measures are being taken to kick off those people who don’t deserve it? And in the grand scheme of things, this will only save £50m from a debt of £170bn. What difference will it make?
Shoplifters Of The World Unite
The empty rates holiday is being extended in further admission that Mandelson was talking Nick Brown when he said it was “good for business” and there is also a general business rates cut for firms in cheap premises. But as we know, London is the world, and how many shops in London will have a rateable value under £12,000? The ones near me I Holloway might, but few others. As with all of these figures, the Treasury cleverly rig the figures so that they get a maximum claim of help for minimum cost. They call it politics while normal people call it lying.
Stop Me If You Think You've Heard This One Before
And then there was the Daily Mail card. The stamp duty cut for first time buyers. For two years. Meaning it’s a political move that the Tories (if they get in) would be forced to either repeal and risk looking silly or continue with when it runs out. Of course there are two very obvious points here. Firstly, it does nothing to help one obtain the massive deposit you now need to buy a house. And secondly, there’s nothing to stop the partner of someone who already owns a house buying another for investment purposes and saving money. In truth, the inheritance tax cap will probably do more good for the housing market given that first time buyers make up such a tiny proportion of the market. And if 1% is the difference between a house being affordable or not, then one should arguably steer clear.
Still, the main reason why it helps the Daily Mail readership is the large proportion of mums and dads funding their kids’ home buys. Which reminds me, when is mother’s day again?
So give or take a few script-dividends amendments, a few green funds designed to play catch up to the rest of Europe (even Portugal have had subsidised green technologies for years), there’s little here to change the world. But Labour has at least given us one important benchmark that can be carried forward to Cannes next year to help you all judge the really swish boat parties.
They won’t have champers, they’ll have premium cider.
With only residential property included in the rise in Stamp Duty to 5% today commercial property can breathe a huge sigh of – probably temporary – relief.
Chancellor Alistair Darling said the 1% rise for properties worth more than £1m would apply to residential properties alone.
The move will fund a doubling in the stamp duty limit for first time buyers to £250,000.
The trouble is, you have to feel the reprieve is only temporary.
Property circles were alive with gossip this week that the top rate of Stamp Duty for commercial property would also rise – a move which would have knocked the quoted real estate sector for six.
Don’t forget, a rise in Stamp Duty has a direct impact on values, with the 1% extra tax assumed to be knocked off the purchase price of a property when it is sold.
But with our yawning national debt it is only a matter of time before commercial property is trapped in the net.
The other major news for property was that 15,000 extra civil servants will be moving out of London – a move that cannot come too soon.
The fallacy that anything other than a core of 250 civil servants need to be near ministers in Whitehall is hopefully finally taking hold, with a pledge to eventually cut the civil service by a third.
But we were left holding our breath for news of more asset sales, with a figure of £40bn having been mooted last week.
There is speculation that Communities Secretary John Denham will be announcing that more property savings can be made at a local government tomorrow.
The key to this is `Total Place’, a new doctrine within Whitehall which sees councils and agencies sharing more services in one area, inevitably freeing up land and buildings.
Apart from that, this was a pre-election non-event, with a Chancellor presiding over £167bn of national debt having the gall to say he would be investing for `growth’.
The one best bit of news was that he appears to have sated his boss’s desire to borrow and spend more, with a promise that extra cash raised would be to cut the deficit quicker than planned.