New UK Stamp Duty Laws Expected To Hit Firms Hard

by Robert Lee, Tax-News.com, London

21 July 2003

Business consultants Grant Thornton have warned firms that rent their premises to be prepared for new stamp duty rules which come into effect on December 1 this year, and could be potentially very costly.

"The stated aim of this new policy is to ensure that those who choose to rent, rather than buy, commercial property pay duty at similar levels to the stamp duty due on a sale of a premises of comparable value," commented Karen Campbell, a tax partner at Grant Thornton, adding: "The measures have been introduced to eradicate stamp duty avoidance, which is admirable, but they do seem particularly punitive."

According to Campbell, the Inland Revenue has taken a rather blinkered approach to the issue and it seems to consider that firms use leases solely as a tax avoidance measure and have not taken into account more genuine motives such as the flexibility of leases and the wish not to tie up substantial amount of capital.

Campbell advises those firms whose leases are due for renewal in the next year should consider bringing forward the date so that it will fall within the existing rules.

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