Stamp Duty Land Tax
As widely expected, the Chancellor announced increases in SDLT on high-value properties. This was presented as a measure which would balance the proposed cut in the 50% rate, although there are far more 50% taxpayers than purchasers of £2m properties. A new 7% rate will apply to transfers of residential property for more than £2m where the date of completion is after 21 March 2012. A transitional measure should preserve the benefit of the former rate (5%) where an unconditional contract had been made by Budget day.
Also as widely expected, the Chancellor announced measures to close down the widespread avoidance of SDLT on high value residences involving the transfer of the property to a company, usually registered offshore. It is then possible to sell the shares in the company rather than the property, attracting a 0.5% charge to Stamp Duty (or no tax at all) instead of the 5% applicable to transfers of land.
A new charge at 15% will apply with immediate effect to transfers of a residential property worth over £2m into a company. The avoidance will still be possible after that, but such a huge upfront charge is likely to make it unattractive.
Mr Osborne also announced a consultation exercise on possible ways of levying annual charges on those who have already set up such structures. He said he found aggressive tax avoidance of this type ‘morally repugnant’ and stated that those who engaged in it had been warned that the tax law would be used to make sure they paid an appropriate amount.