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Chancellor slices up SDLT

The final measure announced in the Chancellor’s Autumn Statement was the one that took listeners by surprise: a major reform of Stamp Duty Land Tax on residential property transactions.  Not only that, but the changes take effect from midnight tonight (3 December).

Crucially, the system has changed from a “slab” system to a “slice” system so that the new SDLT rates apply to the portion of the price that falls within each particular band rather than one rate for the entire price.

Where contracts are exchanged today (3 December) but the transaction completes at any time on or after tomorrow (4 December), buyers will be able to choose whether to pay SDLT under the old rules or the new rules, whichever is more beneficial.

The Chancellor claims that SDLT will be cut for 98% of people who pay it and that everyone buying a house for up to £937,500 will pay less or the same SDLT as under the current system.

Although the reforms only affect residential property transactions, there is no clue as to whether the Government might consider a similar overhaul for commercial property at a later stage.

For corporates, the 15% SDLT rate charged on residential purchases through a corporate envelope is unaffected. For these transactions the slab system for calculating SDLT remains and the table below does not apply.

Also of interest to corporate buyers is the Annual Tax on Enveloped Dwellings (ATED) which is payable by companies on residential properties valued at over £2 million on 1 April 2012 or on acquisition (if later). Apparently, ATED raised 5 times the amount forecast for 2013-14, with significantly more properties above £2 million in envelopes than expected.  The Government announced an increase to the rates of ATED by 50% above inflation. From 1 April 2015, the charge on residential properties owned through a company and worth more than £2 million but less than £5 million will be £23,350; for properties worth more than £5 million but less than £10 million the charge will be £54,450; for properties worth more than £10 million but less than £20 million the charge will be £109,050, and for properties worth more than £20 million the charge will be £218,200.

NEW RATES OF SDLT FOR RESIDENTIAL PROPERTIES (applicable to each slice of the consideration)

  •  0% on any amount up to £125,000
  • 2% on any amount over £125,000 up to £250,000
  • 5% on any amount over £250,000 up to £925,000
  • 10% on any amount over £925,000 up to £1,500,000
  • 12% on any amount over £1,500,000


Factsheet setting out the changes is available at https://www.gov.uk/government/publications/stamp-duty-reforms-factsheet

An online stamp duty calculator is available at: http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

Further details are available on the HMRC website: https://www.gov.uk/government/collections/autumn-statement-2014-hm-revenue-and-customs

and on HM Treasury’s website: https://www.gov.uk/government/topical-events/autumn-statement-2014