The real estate highlights from today's Budget are as follows:
Stamp duty land tax (SDLT)
- From 21 March 2012, the SDLT sub-sale rules change to put beyond doubt that an SDLT avoidance scheme, involving the sub-sale rules and an option to purchase land, is ineffective.
- A new 7% rate of SDLT will come into force, from 22 March 2012, for acquisitions of residential property for more than £2 million.
- A series of measures were announced to tackle the "enveloping" of high value residential properties into companies to avoid SDLT.
- From 21 March 2012, a new 15% rate of SDLT applies to acquisitions of residential property for more than £2 million where the purchaser is, or includes (where there are joint purchasers), a company, collective investment scheme (including unit trust) or partnership in which the partners are not all natural persons.
- Government will consult on the introduction of an annual charge, from April 2013, on residential property that costs more than £2 million where the purchaser was, or included (where there are joint purchasers), a company, collective investment scheme (including unit trust) or partnership in which the partners are not all natural persons.
Capital gains tax
- Government will consult on an extension to the capital gains tax regime, from April 2013, to include gains on the disposal of UK residential property by non-resident non-natural persons, such as companies.
- As announced in the 2011 Budget, legislation will be introduced in the Finance Bill 2012 to make the availability of capital allowances to a purchaser of a fixture subject to certain conditions.
- The Enhanced Capital Allowances Scheme for Energy Saving and Environmentally Beneficial (Water Efficient) Technologies will be updated.
- Further anti-avoidance rules will be introduced to restrict plant and machinery allowances where plant or machinery is acquired from a manufacturer or supplier and there is an avoidance purpose to the transactions, or where the transactions are part of an avoidance scheme or arrangement.
- Legislation will be introduced in the Finance Bill 2012 to ensure that the total amount of capital allowances received by lessees under long funding leases for the period of the lease will equal their net "capital" expenditure under that lease.
- Confirmation of the position from the Autumn Statement that business premises renovation allowances will be extended for a further five years, and changes to the existing regime made to comply with the State Aid rules.
- Confirmation that legislation will be introduced in the Finance Bill 2012 to provide 100% first-year allowances for trading companies investing in plant or machinery for use primarily in designated assisted areas within Enterprise Zones.
General anti-abuse rule (GAAR)
- Following the recommendation of the Aaronson Report, the Government will consult on legislation to introduce, in the Finance Bill 2013, a GAAR targeted at artificial and abusive tax avoidance schemes.
- Self-storage supplies will become automatically standard-rated from 1 October 2012. Currently such supplies are exempt, subject to exercising the option to tax.
- Supplies of construction services and building materials in respect of an approved alteration to a listed or protected building will become standard-rated from 1 October 2012. Currently such supplies are zero-rated.
- From 1 October 2012 there will be a narrowing of the circumstances in which the first sale, or grant of a long lease, by a developer of a substantially reconstructed protected building can be zero-rated.
- The VAT registration threshold will be increased from £73,000 to £77,000.
- The main rate of corporation tax will reduce to 24% from 1 April 2012. Previously the Government had announced that it would be reduced to 25%. There will be further reductions in the main rate of corporation tax to 23% from 1 April 2013 and 22% from 1 April 2014.
- As announced in the 2011 Budget, legislation will be introduced to permit the authorisation of tax transparent funds from summer 2012.
- There will be changes to the enterprise investment scheme and venture capital trusts (VCTs) provision. The changes will simplify the rules and increase certain thresholds, with effect from 6 April 2012 (1 April 2012 for VCTs).