Changes to Stamp Duty Land Tax

Stamp Duty Land Tax is to be charged at a new rate of 7% on acquisitions of residential property after 21 March, where the chargeable consideration for a single dwelling exceeds £2million. This applies to the purchase of real estate or interests in partnerships holding real estate, but not to the shares in a company.

There will also be an annual charge for companies holding residential property valued at more than £2million. The rate of charge has not yet been fixed, but a rate of 0.3% to 0.7% is expected, dependent upon the value of the property, which will come into force from April 2013.

A new rate of 15% is to be imposed on acquisitions of residential property from 21 March 2012 where the consideration is in excess of £2million and is made by ‘non-natural persons’. This would include companies, partnerships with corporate partners and collective investment schemes. There is an exemption for transfers to a property developer with a two year track record of carrying on property development. This raises the question of the position of a property developer with less than two years of trading and there is concern that legitimate property businesses will be affected.

The charge also applies to incomplete dwellings, land used with dwellings and ‘land which subsists or will subsist for the benefit of dwellings’.

It does not apply to purchases of shares or units in unit trusts where the property was already in a company on 21 March 2012. The subsequent acquisition of shares will continue to avoid SDLT.

There is also an exclusion for transfers to corporate trustees of settlements, which is confined to genuine settlements which happen to be managed by a corporate trustee.

The changes apply from 22 March 2012.