Worked hard for your dream holiday home? Get set to pay £3,000 a year for the privilege under Labour
Those dreaming of buying a vacation bolthole in the country or by the sea could find their plans rained on by a Corbyn administration.
Second home owners are already accused of sending prices skyrocketing to unattainable levels for locals. But Labour is likely to turn the screw on those using hard-won savings to treat themselves to a home away from home.
It suggested recently that the tens of thousands of owners of second homes who use their properties just for holidays could be taxed an average £3,000 a year – with the cash used in part to fight homelessness. Those who rent out their homes would escape the tax.
Bolthole: But a Labour Government could slap a tax on those with a second home
Labour might also take a harder line on holiday property council tax perks. Currently, some local authorities offer council tax discounts on second homes but this could be ended by Corbyn. The Conservatives have already made ownership of second dwellings less financially appealing.
Since April 2016, those purchasing an additional property must pay higher rates of stamp duty in England and Wales.
Buyers must fork out an extra three per cent. In Scotland, where it is known as Land and Buildings Transaction Tax, the additional charge is 4 per cent.
A buyer purchasing a £250,000 property in England would pay stamp duty of £2,500 (£2,450 in Wales, £2,100 in Scotland) if it were their only home. But if it were a second property, the bill leaps to £10,000 (£9,950 in Wales, £12,100 in Scotland).
But Sarah Coles, of broker Hargreaves Lansdown, warns second home owners not to act in haste and sell up.
She says: ‘There are so many unknowns. If you’ve finally bought the cottage by the sea you have always dreamed of, it would be a shame to sell in a panic over a possible change of government.’
BUILD A CASH CUSHION ABROAD
Owners of holiday properties abroad are unlikely to dodge any new Corbyn-devised wealth taxes … however far away from home their retreat might be.
Although there is limited action to take to avoid a future tax grab – other than disposing of your property now – you could start transferring a bit more cash to a foreign bank account at current exchange rates.
This means you can build a cushion of cash now to help meet future property and living costs should the pound tumble against leading currencies. Alternatively, those with boltholes abroad could consider a foreign currency account they can hold anywhere, such as the ‘borderless’ account offered by Transferwise.
Similarly, travellers can lock into exchange rates when they look attractive by taking out a currency card.
Load them up before departure at the rate of exchange on the day purchased and use them like a debit card in shops and restaurants while abroad. The best include those from WeSwap and FairFX.