The real estate highlights from today's Budget are as follows:
Stamp duty land tax (SDLT)
- Relief will be introduced for "bulk" purchases of more than one residential property. Where the relief is claimed, the rate of SDLT will be determined by the mean average consideration for each property (subject to a minimum rate of 1%).
- Three SDLT avoidance measures will take effect from 24 March 2011:
- The exchange rules will be amended so that the chargeable consideration is never less than the chargeable consideration given (prior to the change, where the exchange rules applied, the chargeable consideration was solely deemed to be equal to the market value of land acquired).
- The definition of "financial institution" (for the purposes of alternative property finance reliefs) will be changed. The new definition will be imported from the Income Tax Act 2007, but excludes holders of a Consumer Credit Licence.
- The sub-sale rules will be amended so that the relief is not available in conjunction with any alternative property finance reliefs.
- Enterprise Zones (EZs) will be introduced across the Local Enterprise Partnership (LEP) areas of England, with an individual LEP having the power to specify the location of an EZ in its area.
- The first 10 LEPs to get one EZ each are: Birmingham & Solihull, Leeds City, Sheffield City, Liverpool City, Greater Manchester, West of England, Tees Valley, North Eastern, The Black Country and Derby & Derbyshire (with Nottingham & Nottinghamshire). There will also be an EZ in London (as determined by the Mayor). The location of 10 more will be "determined by competition".
- The Government "will consider, in a limited number of cases, the scope for introducing enhanced capital allowances to support EZs in assisted areas, where there is a strong focus on high value manufacturing".
- There is to be a business rate discount up to 100% for businesses located in EZs for five years, which could be worth up to £275,000 over that period "for businesses that move into an EZ during the course of this Parliament".
- All growth in business rates in an EZ for at least 25 years will be "retained and shared" by local authorities in the LEP and hypothecated to reinvestment in the LEP region (not just the EZ).
- There is to be radically simplified planning approaches in the EZ.
- The Government will work with local authorities and individual LEPs to promote the use of Tax Incremental Financing to support long term viability of the area.
- The availability of the Business Premises Renovation Allowance, a highly favourable form of capital allowance for those bringing derelict buildings in designated areas back into productive use, will be extended by five years to 2017.
- If an election is made in relation to any short life asset, it takes capital allowances in its own "pool" over a four-year period before being "re-pooled" with general plant and machinery (provided that the short life asset has not already been disposed of). The Government will extend this four-year period to eight years, so that there is a greater window to sell an asset at a greater-than-depreciation loss and accelerate allowances; but equally greater scope for the Government to recoup excessively-given capital allowances.
- In a very minor extension of the scope of an existing capital allowance, energy-efficient hand-dryers will qualify for enhanced capital allowances at 100%.
- The small business rate relief holiday will be extended by one year to 30 September 2012.
- Abolition of land remediation relief (pencilled in for beyond 2012).
- The next increase in Aggregates Levy (from £2.00 per tonne to £2.10 per tonne), which was due to take effect in April 2011, has now been postponed to April 2012.
- Legislation will be introduced to treat foreign undertakings for collective investment in transferable securities (UCITS) funds as not being UK resident, in cases where they otherwise might be resident by virtue of having a UK resident fund manager.
- Following consultation, the Government will legislate in 2012 to remove the 2% conversion charge on REITs.
Capital gains tax
- For disposals on or after 6 April 2011, the lifetime limit on gains qualifying for entrepreneurs' relief (which gives a 10% rate rather than the full rate of up to 28%) will double from £5 million to £10 million.
- From 1 April 2011 the main rate of corporation tax will reduce to 26% (rather than 27% as previously announced).
- The VAT registration threshold will be increased from £70,000 to £73,000.