Changes to Stamp Duty Land Tax (“SDLT”)

05 April 2012

Some of the changes to SDLT announced by the Government in the recent Budget that many will be aware of include:

  • On the purchase of residential property (freehold or leasehold) by individuals SDLT will be payable at 7% of the chargeable consideration where the chargeable consideration exceeds £2,000,000.
  • SDLT will be charged at 15% on the acquisition of UK residential property where the chargeable consideration exceeds £2,000,000 and the property is acquired by certain classes of “non-natural persons” (e.g. companies, etc.).

(See also: HMRC announcement

These provisions came into effect at midnight on the day the Budget was announced (21 March 2012).  For individuals who exchanged contracts for a property worth more than £2 million prior to 22 March 2012, the then existing 5 per cent rate of SDLT should apply.  However, Michael Haringman (Real Estate Partner at Quastel Midgen) warns that “this would only be the case where the contract which was exchanged prior to 22 March 2012 was unconditional and remains unaltered after 21 March 2012”.  For example, if there is any variation of the contract or assignment of rights under the contract on or after 22 March 2012 or if the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, the higher SDLT rate of 7% will apply (even though the contract was exchanged on or before 21 March 2012).

Quastel Midgen’s Real Estate Team can be contacted with any queries you may have about these issues or any other property matters.