You may be aware that the Chancellor of the Exchequer, George Osborne, announced in his Autumn Statement on 3 December 2014 that from yesterday (4 December 2014) SDLT for residential property is to be charged at different rates depending on the portion of the purchase price that falls within each rate band.
This now puts SDLT in a similar position to Income Tax in that it is paid on a graduated scale, rather than on a flat rate as previously.
The changes will apply to residential properties completed on or after 4 December 2014. There is no change to how SDLT is calculated on purchases of non-residential property or on the rent payable when a new lease is granted.
Generally speaking, clients who are paying more than £937,500 will pay more SDLT under the new rules. However, there is a band between £1,000,001 and £1,124,999 where less SDLT will be paid under the new rules.
Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on or after 4 December 2014, you can choose whether to use the old or the new rules.
If you wish to undertake your own calculation we would advise you to use the following link, which will take you to an online SDLT calculator giving the rates payable under both the old and new rules:
http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Unfortunately where transactions completed before 4 December 2014 SDLT has to be paid under the old rules.
Similarly, where contracts are exchanged on or after 4 December 2014 you cannot choose to use the old rules and SDLT will have to be paid under the new rules.
We are advised by HMRC that where residential properties are being purchased by non-natural persons such as companies, the old rules still apply for transactions over £500,000 completing on or after 4 December 2014, and a flat rate of 15% will apply to the whole of the purchase price. We will be monitoring this situation and will advise if the guidance changes.
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