Followings today’s Autumn Statement, the Chancellor announced a number of changes in relation to property taxation. Two of the more important changes are set out below.

Stamp Duty Land Tax (SDLT)

The Chancellor used Autumn Statement 2014 to make significant changes to SDLT rates. From 4 December 2014, SDLT rates for purchases of UK residential property will be as follows:

  • 0% on homes worth up to £125,000;
  • 2% on homes worth up to £250,000;
  • 5% on homes worth up to £925,000;
  • 10% on homes worth up to £1.5 million; and
  • 12% on all homes worth more than that.

Unlike the current ‘slab’ system, the new SDLT rates will be progressive like the income tax rates so that they will apply only to that part of the property price that falls within each band.

As noted above, the new SDLT rates come into effect from Thursday 4 December 2014 onwards. The Chancellor told the House of Commons that individuals who have already exchanged contracts prior to the 4 December will have the choice whether to use the new measures or not. Those that have completed before 4 December will not benefit from the new rates. Instead, they will have to pay SDLT in accordance with the old rules. This is not affected by whether the buyers have completed an SDLT return form. 

Annual Tax on Enveloped Dwellings (ATED)

The Chancellor also used the Autumn Statement to increase the ATED charge.

By way of background information, the ATED is intended to dissuade individuals from acquiring “high-value residential” property in the UK through, principally, companies (known as “enveloping”). High value residential dwellings are dwellings valued at over £2 million.

The Chancellor told the Commons that the annual charges on the ATED will increase by 50% above inflation for residential properties worth more than £2million for the chargeable period 1 April 2015 to 31 March 2016. In full, the annual charges on the ATED for 2015/16 are:

  • £23,350 for properties worth between £2m-£5m;
  • £54,450 for properties worth between £5m-£10m;
  • £109,050 for properties worth between £10m-£20m;
  • £218,200 for properties worth over £20m.

The Chancellor also said that the government would be introducing changes to the filing obligations and information requirements with respect to properties within the ATED that are eligible for reliefs to simplify the process. Further details about these changes will be announced soon. However, they are meant to come into effect from 1 April 2015.