Surprises in Stamp Duty Land Tax (SDLT)

Higher rates of SDLT on additional dwelling was unveiled in the Autumn Statement, and then consulted upon. As expected, from 1 April, acquisitions of additional dwellings will suffer increased rates of SDLT.

However there are surprises in the detail including:

  • Ÿno exemption for large scale or portfolio investors, despite being suggested in the consultation document
  • an increase to the time allowed for claiming a repayment, if a purchaser buys an additional dwelling before selling their main dwelling: they will have 36 months after buying the new property in which to dispose of their previous main residence and claim a repayment
  • joint purchasers all being subject to the additional rates, even where only one of them already owns a dwelling, with no apportionment for the ‘first time buyer’
  • a requirement to pay the additional rates and claim a refund even if a prior main residence is sold after acquisition of the new residence but before submission of the SDLT return.

On reading the draft legislation and explanatory notes, one can imagine other quirks or pitfalls arising. It seems that ‘buyer beware’ has never been more relevant.

The cherry on the slices of cake: changes to SDLT on non-residential property

In a shock announcement, the Chancellor re-aligned the method of calculating SDLT on residential and non-residential properties. More surprisingly, he has done so with effect from midnight tonight.

Until December 2014, both systems had used the ‘slab’ system, but at this point SDLT on residential property changed to the ‘slice’ system. Today’s change, restores harmony by applying the ‘slice’ system to acquisitions of non-residential properties.

To keep us on our toes, however, the rates and thresholds have also changed, so that on acquisitions in excess of £500,000, the rate of SDLT is 5% (instead of the previous 4%).

Finally, SDLT on leases also receives attention, with the introduction of an additional, higher rate (of 2%) to the extent that the net present value (NPV) of the rents receivable under the lease exceeds £5m. Previously, a flat rate of 1% had been chargeable on the NPV of a lease.

The English translation of a Chinese curse springs to mind: “May you live in interesting times!”.