Autumn Statement 2014: Property authorised investment funds will no longer be hit by a double taxation when transferring existing properties to use as seed assets, chancellor George Osborne announced in his Autumn Statement.
Under current rules, PAIFs have been hit with a 4% tax when transferring assets, on top of the SDLT that they pay at the time of buying the property.
The measure will come into effect in 2016.
“This is really positive news, but the property funds industry now has a long wait until the removal the double taxation is introduced,” said John Forbes, independent consultant and former real estate funds partner at PwC.
Commenting on the changes, John Cartwright, chief executive of the Association of Real Estate Funds, said: “We welcome the government’s intention to introduce a SDLT relief for seeding investment – a much-needed removal of double taxation that can help retail investors diversify their portfolio over the long term, particularly as we move further into a defined contribution world in which individuals will need to take responsibility for their retirement savings.
“Real Estate can be a key asset class to help people build up their pension pot.”
However, the deferral of the measure will stop funds being launched in the meantime, or could lead some funds to launch offshore instead of the UK.
“We would therefore urge bringing forward the measures to the Finance Bill 2015,” he said.
