Stamp Duty – A Rush for Completion?
From 1 April 2016 higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional residential properties such as buy to let properties and second homes. The higher rates will apply to purchases above £40,000 and an additional 3 % will apply above the standard SDLT rate for the value of the acquisition. Currently it is not anticipated that the higher rates will apply to corporates or funds making significant investments in residential property, however the government intends to consult on the policy in detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.
ATED and Higher Rate SDLT – Relief Extended
Corporate property owners will also see the extension of the reliefs available to ATED and the 15% higher rate of SDLT. This will now apply to equity release schemes (home reversion plans), property development activities and properties occupied by employees from 1 April 2016 and will be introduced in the Finance Bill 2016.
Corporate Development – Development Stimulus through SDLT Protection
For corporate property investors and developers, the government will be introducing a seeding relief for Property Authorised Investment Funds (PAIFs) and Co-ownership Authorised Contractual Schemes (CoACSs) and making changes to the SDLT treatment of CoACSs investing in property. This is to prevent SDLT from arising on the transactions of development units. The government has indicated there will be a defined seeding period of 18 months, a 3 year clawback mechanism and a portfolio test of 100 residential properties and £100 million value or 10 non-residential properties and £100 million value. These changes will take effect from the date Finance Bill 2016 receives Royal Assent.
Other Key Measures Presented for Review:
– The adaptation of the Help to Buy scheme for London. This is proposed with a view to offering a 40% interest-free loan (20% outside Capital) for 5 years for buyers with 5% deposit.
– The Extension of UK Help to Buy scheme from 2020 to 2021.
– The reduction of SDLT payment times to 14 days of completion (rather than 30 days) by April 2017/18.
– The implementation of Capital Gains Tax on disposal of residential property to be payable within 30 days (rather than following tax year) from April 2019.