Penningtons Manches' property entrepreneurs team, led by Martin Codd, burned the midnight oil last night to save their clients and their buyers in excess of £200,000 of stamp duty land tax (SDLT) before the changes announced yesterday in the Autumn Budget came into force at midnight last night.
Just four minutes before midnight, Martin secured thousands of pounds of savings for his client’s buyer by exchanging contracts on a number of transactions for high value residential properties. He said: “We have several happy clients this morning, especially one for whom our senior associate, Denielle Rickman, managed to save £72,000 by exchanging contracts before the deadline. We responded quickly to the announced changes, notifying high net worth clients at risk and advising them of their additional exposure to SDLT if an exchange was not secured in time.”
On 3 December 2014, the Chancellor of the Exchequer announced a reform of how stamp duty land tax (SDLT) is calculated for residential property purchases which complete on or after 4 December 2014. The reform does not affect purchases of non-residential property, enveloped property or the charge on rents. The reform will apply to residential property purchases throughout the UK. In Scotland, it will apply until Land and Buildings Transactions Tax (LBTT) replaces SDLT for transactions from 1 April 2015.
This reform will mean that, rather than a single rate of tax being charged on a purchase, each new SDLT rate will only be payable on the portion of the property value which falls within each band. These new rates and bands will apply to residential property purchases completing on or after 4 December 2014, subject to the following transitional rules. Where contracts have been exchanged before 4 December but complete on or after that date, the purchaser can choose whether to pay tax under the old or the new rules. SDLT will be cut for 98% of people who pay it. All those purchasing a property for less than £937,500 will pay less or the same SDLT under the new rules.
The changes will eliminate the ‘cliff edge’ increases in SDLT liability which occurred under the old rules, and so reduce pricing distortions which occurred around the previous thresholds. A calculator is available here on HMRC’s website which calculates the SDLT due under both the old and new rules.