19:00 PM, 14th December 2020, About 10 months ago
For individual landlords and relatively new Partnerships, the changes to HMRC’s manuals could be very welcome news.
The 3% additional rate does not apply to residential properties if a property rental business has a commercial element, e.g. flats over a shop or any other commercial property.
Together with the Chancellors Stamp Duty incentive on transaction under £500,000 until March 2021 and Multiple Dwellings Relief which applies SDLT to the average values of dwellings in property businesses, it is now viable for more landlords to consider incorporation than ever before.
The video below was filmed immediately after HMRC updated their manuals and includes a whole host of tips to take maximum advantage of the changes, even if your rental property business doesn’t currently include any commercial property elements.
5 residential properties worth £600,000 each AND
5 more residential properties worth £400,000 each
Owned and operated as a full time rental property business by a sole owner.
SDLT if this business is incorporated pre or post 31st March 2021 and without claiming MDR = £239,500
SDLT if this business is incorporated pre 31st March 2021 and where MDR is claimed = £150,000
SDLT if this business is incorporated pre 31st March 2021 and where MDR is claimed AND where the owner acquires a £20,000 chip shop investment property pre-incorporation (new rules) = £50,957
Therefore, as a result of buying the chip shop for £20,000 pre-incorporation and incorporating his business prior to 31st March 2021, this landlord saves £99,043
in SDLT when compared to the best case scenario before the re-write of HMRC’s SDLT manuals and the removal of the Chancellors incentive.
WARNING – if the same transaction completes after 31st March 2021 the SDLT would be £151,000
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