If your business owns land or property, then it is important to consider your responsibilities with respect to reporting income and/or gains received and paying any tax due.
By taking pro-active advice, you may be able to reduce your business’ tax bill.
Stamp duty land tax (SDLT) was introduced in 2003* and since then has been subject to extensive reform.
SDLT is charged on the purchase of interests in land and is payable by the purchaser. It is calculated based on the consideration paid, and includes not only money but also money’s worth (e.g. the assumption of a mortgage).
SDLT is currently charged on a ‘slice’ basis (like income tax). This means that SDLT is charged at increasing rates for the amount of consideration that falls into the different SDLT bands.
Different rates apply depending upon whether or not the property is residential or mixed/commercial and whether the individual buying the property is an individual or non-natural person (e.g. a company).
Higher SDLT Rates
Since 1 April 2016, all purchases of residential properties have been subject to an extra 3% on SDLT in each band where the purchaser is either:
These new rates are subject to a number of special rules and transitional provisions. Extra care must be taken when considering whether the higher rates will apply as these rules can catch taxpayers by surprise leaving them with unexpected tax bills or having paid the higher rates when they aren’t applicable.
Since 2012, a special rate of 15% on the total consideration paid has applied to the purchase of residential properties by non-natural persons. This special rate is separate to the recent 3% increase to each SDLT band.
The threshold for this special 15% rate was originally set at £2million but from 2014 has been reduced to £500,000.
* From 1 April 2015 land in Scotland is subject to the Land and Buildings Transaction Tax and is not covered here.