Wed 25 Nov 2015
The Government has announced proposals to extend the scope of reliefs from the higher 15% of stamp duty land tax (SDLT) and the annual tax on enveloped dwellings (ATED) to cover residential property held for the purposes of an Equity Release Scheme or Home Reversion Plan, property occupied by employees, or acquired for demolition or conversion into non-residential use.
Currently, companies and other so-called non natural persons (collective investment schemes and partnerships with at least one corporate partner) pay SDLT at 15% on the acquisition of any dwelling over £500,000. They are also subject to ATED tax on any high value dwelling held during the tax year – for the current year a high value dwelling is one over £1 million but the threshold will be reduced to £500,000 for 2016/17.
Relief from both the 15% SDLT rate and ATED is available, subject to meeting the relevant conditions, where a dwelling is held for the purposes of a property development, property rental or property trading business; or for dwellings occupied by certain employees or open to the public; or for farmhouses and dwellings held for charitable purposes.
From 1 April 2016 relief will be extended to cover dwellings held for the purposes of an Equity Release Scheme or Home Reversion Plan or dwellings acquired for demolition or conversion into non-residential use. The Autumn Statement documentation also refers to an extension of the relief to cover property occupied by employees. As there is an existing relief available for dwellings occupied by certain employees for the purposes of a qualifying trade, we will need to wait until the detailed proposals are available to determine what changes are proposed under this heading.
For more information contact James Summers
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