Spending Review 2015 – 3% increase on Stamp Duty for BTL and second homes

Reply to the comment left by "Paul Baker" at "26/11/2015 - 22:06":

PAUL I'm stating the obvious but you will not recover any of the SDLT
if you have not made a gain after deducting the current approx £11000 annual CGT exemption for each of the property owners[ if they have not already used the exemption for other Capital Gains of course ]

Reply to the comment left by "money manager" at "26/11/2015 - 11:42":

I agree, if you buy a property, you could even move in to it for a couple of weeks then make a decision and if you decide it doesn't suit you move back to your original home.... I think it would be very difficult for HMRC to prove that was your intent.

I think politicians should be very well versed in this practice called flipping which many did during the expenses scandal and was proved although morally wrong they did nothing actually wrong so why would us doing the same be any difference.

Reply to the comment left by "steve p" at "26/11/2015 - 23:16":

Unless you are paying cash for the property, if you already own your own residence then you will only be able to raise finance on your next purchase with a BTL mortgage so if you claim you originally intended to live in it then you will be doing what is known in the trade as gaming ie MORTGAGE FRAUD I would like to see someone building up a portfolio using this method ! Forget it and sleep at night the HMRC are not stupid.

Reply to the comment left by "ray selley" at "27/11/2015 - 00:01":

Yes thats why I did say on page 5 originally if you buy cash, obviously if a BTL mortgage is involved it will not work. Although you could take out a BTL mortgage after you moved back to your old address.

Reply to the comment left by "steve p" at "27/11/2015 - 00:12":

The best way to approach this is to get clearance from HMRC for your scenario..Of course they will not consider this until the deed is done and then almost certainly reject it

Reply to the comment left by "Brian H" at "26/11/2015 - 13:25":

See: https://www.gov.uk/government/publications/main-tax-announcements-for-autumn-statement-2015/main-tax-announcements-for-autumn-statement-2015

It appears to be 3% on the amount over £40,000 and then following the usuaal tiers.

Reply to the comment left by "Vanessa Barlow" at "26/11/2015 - 18:55":

What I meant was that it is actually irrelevant whether you own a property elgibile for PRR or not, the relief is only available to individuals not corporates and therefore the company can't get a "by" on it's first and only or non contiguous second.
In https://www.gov.uk/government/publications/main-tax-announcements-for-autumn-statement-2015/main-tax-announcements-for-autumn-statement-2015 it states that the SDLT is supplement applies to "additional residential property", I don't think that George was thinking, he wasn't, or thinking of small corporates and based on the limited information available it appears that a renovation job would be caught; I think this is a major gaffe. Is it worth looking at conversions?

Autumn Statement 2015: Reducing the payment window for CGT on residential property
25th November 2015
The CGT on the gain arising on the sale of a residential property is currently due by 31 January following the tax year in which the disposal occurs. For unconditional contracts the disposal date is the date of exchange.

From April 2019 taxpayers will be required to make a payment on account of any CGT due on the disposal of UK residential property within 30 days of the completion of the disposal. A payment on account will not be due on properties which are not liable to CGT because they qualify for principal private residence relief. Draft legislation will be published for consultation in 2016.

Those individuals relying on use of sale proceeds from the sale of a residential property that does not qualify for PPR, to fund a contemporaneous purchase of a second property may need to consider alternative means to fund the CGT liability.

It is not clear at this stage how the new changes will be administered. The compliance burden may rest on the conveyancer, who may need to deduct CGT and file a tax return on the vendor’s behalf. No doubt the result will be higher sale expenses.

Reply to the comment left by "steve p" at "27/11/2015 - 00:12":

The land registry will show that you own two properties which will probably trigger something on an HMRC computer. They will send you a bill for 3% of the purchase cost.

You can then argue the toss with them, but moving in for a week would not be sufficient. You would need to demonstrate that it was your permanent habitual residence.

Considering that the rule is meant to capture holiday homes as well, the presumption would be that the purchase of any 2nd home will be subject to the tax.

Autumn Statement 2015: Additional reliefs from ATED and 15% SDLT on Higher Threshold interests
25th November 2015
ATED Regime

Broadly, the ATED regime applies to companies, partnerships with a corporate member and collective investment schemes (UK or non-UK) holding high value residential properties. A company acting as a trustee of a trust or as nominee for an individual is exempt from the ATED charge.

From 1 April 2015, the definition of high value properties dropped from £2million to £1million and from 1 April 2016, this threshold will fall further to properties worth more than £500,000.

There are a number of reliefs available from the ATED charge including:

A property letting business;
A property trading business;
A property development business;
Dwelling opened up to the public e.g. houses of historical interest;
Farmhouses; and
Properties occupied by employees.
These reliefs need to be claimed by 30 April in the year to prevent penalties arising.

15% SDLT rate

For SDLT purposes, a property valued at more than £500,000 is considered to be a “higher threshold interest” and in the absence of any exemption, SDLT is payable at the slab rate of 15% on the purchase of such interest by a company, partnership with a corporate member or collective investment scheme.

There are three main reliefs available from this additional rate being applied:

A property letting business;
A property trading business; or
A property development business.
The above reliefs available from ATED and the 15% higher rate of SDLT will be extended to cover equity release schemes (home reversion plans), property development activities and properties occupied by employees. These extensions will apply from 1 April 2016.

The inclusion of these reliefs is welcomed as arguably, such transactions should never have fallen within the scope of the ATED and 15% SDLT regimes. The Government does not intend for the extension to these reliefs to apply until April 2016 so purchasers in such circumstances may wish to defer their acquisitions.