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Stamp Duty Land Tax increase - does it affect you?

View profile for Claire Battye
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Since the Chancellor announced his Budget back in March, much has been written about the recent introduction of a 7% Stamp Duty Land Tax (SDLT) rate on the purchase of high value residential properties over £2 million (15% if purchased through an offshore company).

This has left some commercial property clients confused as to the current position and even more unclear for residential property developers. So what would happen if you are entering into a joint venture to put together potential development sites using a newly created SPV? What happens if you enter into an option for a high value property that you propose to convert? It would appear that, certainly for the time being, you could be caught by the higher charge.

Although this seems a significant move by the Government, it is important to remember that this is a stated initiative to ensure that people buying high value residential property pay the proper tax that they should. There is much that has stayed the same. This includes tax rates for all other commercial transactions which have remained and are as set out below:

RateValue of Transaction (£)
Nil0 - 150,000
1%150,001 - 250,000
3%250,001 - 500,000
4%Over 500,000

The next initiative by the Government is the introduction of an annual charge in respect of high value residential properties – the so called Mansion Tax which is being consulted upon with a view to introducing legislation in April 2013. We will keep you informed.

The Commercial Property Team at Warner Goodman will be happy to assist in helping you to understand if these changes impact upon your proposed deals, to discuss the impact of the changes on you and any possible reliefs that may be available. We have contacts with Taxation specialists who can provide more specific advice on your individual matters.

Contact the Commercial Property Team today on 02380 717717.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.