A stamp duty loophole in one part of the UK is likely to be closed later this year.
Until now buying a residential house or commercial office or warehouse on Jersey via the acquisition of share capital in a property-owning company has been legal and does not attract stamp duty.
However, it’s being reported that Jersey’s government believes this has resulted in a growing number of sales escaping stamp duty - called Land Transaction Tax on the island - particularly in the office sector.
According to Step - a professional body comprising lawyers and accountants, amongst others - Jersey’s Minister for Treasury and Resources calculates that between 62 and 84 per cent of large office transactions are estimated to have involved ‘enveloping’ in this way between 2018 and 2020.
Now a new Enveloped Property Transactions Tax is designed to discourage this practice and may become law on Jersey by the summer.
Meanwhile Land Transaction Tax is also to be extended, the aim being to ensure that the fiscal regime is uniform across enveloped and non-enveloped properties.
Step says the EPTT will apply to residential properties costing more than £500,000 and commercial properties over £700,000. Residential properties sold for GBP500,000 will attract an EPTT charge of 1.6 per cent.
Jersey's treasury does not believe the market will be significantly affected, and Step cites an official forecast saying: ”The most likely outcome is that sellers will receive lower prices for their property, up to the value of the property tax payable for each transaction.”