Budget 2016: Tax crackdown on the property tycoons who move profits abroad

High life: One Hyde Park in Knightsbridge is owned by Project Grande (Guernsey) Ltd
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George Osborne launched a major Budget crackdown today against tax-avoiding developers pocketing billions of pounds from London’s luxury property market.

The Chancellor targeted tycoons behind a wave of £1 million central London flats whose profits are shifted to tax shelters such as Guernsey and Jersey to avoid full UK tax.

The clampdown in the capital and other cities will be one of the most popular money-raising measures in Mr Osborne’s Red Box.

He declared that any tower block built on British land in future will mean UK taxes being paid on all the profits.

That will be cheered most of all by long-established house builders such as Barratt and Taylor Wimpey, who pay UK taxes already.

There has been controversy over some of London’s most prestigious new luxury blocks where developers can make billions on apartments snapped up by international investors but whose own headquarters are registered in the Channel Islands or the Isle of Man.

Mr Osborne has led international action at the G20 against tax avoidance and introduced the diverted profits tax to threaten online firms paying inflated royalties to owners in tax havens. Many London property developers are owned by businesses based in offshore tax havens.

The best known example is One Hyde Park in Knightsbridge, which is owned by Project Grande (Guernsey) Ltd, a joint venture between Christian Candy’s CPC Group and Sheikh Hamad bin Jassim bin Jaber Al Thani, the former prime minister of Qatar.

But there have been dozens of others during London’s great building boom of the past decade.

In other housing and development moves, thousands of Londoners who make money by renting their front drives as parking spots are to be offered a new £1,000 tax allowance.

Others who let their flats and houses as holiday homes using sites such as Airbnb will also be offered the perk as an incentive to declare their earnings.

Londoners with driveways near to Wembley, Twickenham and other major venues can earn up to £200 a month offering parking spots to match- and concert-goers through websites.

London is among cities that have seen a boom in homes offered as holiday lets or swaps, using the net to trade.

The Chancellor is offering to make the first £1,000 of earnings on property rental tax-free in most cases.

He hopes to encourage people to declare their full earnings in a growing sector of the economy that sometimes escapes the taxman’s net.

The Budget also included plans to make the NHS and other public bodies release spare land for thousands of badly needed new homes. It promoted new “garden villages” outside the centres of towns and cities.

The Chancellor also unveiled £115 million of special measures to eradicate rough sleeping in London after a rise in homelessness.

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