Higher Rates of Stamp Duty Land Tax

Higher Rates of Stamp Duty Land Tax

Higher Rates of Stamp Duty Land Tax

At Autumn Statement on 25 November 2015, the Chancellor of the Exchequer announced that higher rates of stamp duty land tax (SDLT) would apply from 1 April 2016 to purchases of additional residential properties, such as second homes and buy-to-let properties. The Government consulted on details of the policy design between 28 December 2015 and 1 February 2016.  Representations were made during the consultation that the new rates should not apply to public bodies, especially not to local authorities with housing responsibilities.

However, somewhat surprisingly the higher rates do apply to local authorities and other public bodies.

From 1 April 2016 the rates for Stamp Duty Land Tax (SDLT) in England, Wales and Northern Ireland increased for purchases of additional residential properties worth £40,000 or more, subject to conditions.  The rates will be three percentage points higher than the existing residential rates. The higher rates apply even if, before the purchases, the public body held no other residential properties but after the purchases ended with more than one.

Public bodies will fall into the category of “Companies and others non-individuals”.  The conditions that must be met for the higher rates to apply are:

•             Condition A – the dwelling purchased is worth £40,000 or more;

•             Condition B – the dwelling is not subject to lease which has more than 21 years

to run on the date of purchase

If these conditions apply to at least one of the dwellings purchased, the higher rates will apply. Please note, the higher rates apply even if you started with no properties.

Where two or more dwellings are purchased in a single or linked transaction multiple dwelling relief can be claimed. The new higher rates will apply to claims for multiple dwellings relief. However, where six or more dwellings are purchased in a single transaction the purchaser can choose whether to apply the non-residential rates of SDLT instead.

This is an unwelcome and strange effect of the new SDLT rates, one that public bodies are now only just realising applies to them.

For further advice on how the new rates will apply to your proposed transactions, and whether there are any mitigating reliefs or exemptions, please contact PSTAX at:

Nick Burrows 07805 449651 Nick.Burrows@pstax.co.uk
Richard Strevens 07787 428605 Richard.Strevens@pstax.co.uk
Peter Gladdish 07977 513735 Peter.Gladdish@pstax.co.uk