Stamp Duty Land Tax for Companies

Published: 15 May 2014

Two years have passed since George Osbourne raised  the cost of Stamp Duty Land Tax (SDLT) for 'non-natural persons' (NNPs) on residential dwellings worth over £2,000,000 from 7% to 15%.

NNPs are presently described by HMRC as "certain companies, partnerships with company members and managers of collective investment schemes which own residential property in the UK worth over £500,000".

The 2012 changes happened overnight. 24 months later and we have now seen the £2,000,001 threshold reduced to just £500,001. Any residential property purchased for this price and upwards by a company, whether foreign or domestic will face the same 15% liability. Once again these changes were implemented with immediate effect.

It is obvious why this levy has proved so attractive to the Government:

The increase in SDLT revenue (£6.9 billion collected in tax year 2012/13) and a dramatic reduction in SDLT and Inheritance Tax avoidance (one of the main justifications given for the initial introduction in 2012).

The SDLT changes also target wealthy individuals who are more likely to buy within the privacy of a corporate vehicle.

The previous rise in SDLT on properties over £2,000,000 might just have affected the wealthier investor, but at £500,001 the boundaries have been widened as this longer affects just the “super-rich” but also has an impact on “ordinary” buyers.

It has been announced that buy-to-let landlords, funds and housing associations will be exempt from the changes. However, this does not exclude domestic middle to high value property development companies who do not purchase properties with a view to letting them out. 

In a market where it is hard to find a property in Central London for less than half a million pounds, it remains to be seen in the current market whether the foreign investors or NNPs will be put off by the changes, which may well result a slower growth rate on the high value properties in London and elsewhere.

For more advice and information please contact Victoria Tanousis, a partner in the Property Team.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.