UK – A rumour that the next UK budget will include an increase in stamp duty from 4% to 5% on properties over £500,000 (€807,000) will effectively be a tax on pension funds, warns chartered accountants, Kingston Smith (KS).

KS points out the new tax would hit commercial as well as residential property, and pension funds, with £41m invested in property, would suffer the most, since they are the UK’s largest investors in commercial real estate.

According to KS, pension funds have been forced to increase their property holdings to provide adequate returns for their investments as a result of falling stock market returns.

Comments Martin Muirhead, a partner in KS : “The stamp duty will not only cost pension funds on the purchase of properties but will also act as a drag on the future growth of commercial property.”