New taxes hit UK residential property

In the Budget, the Chancellor stuck to his promise to come down like a “tonne of bricks” on wealthy individuals who are seen as not paying their fair share of SDLT by buying valuable residential property in corporate vehicles and eventually selling the shares in those corporate vehicles free of SDLT. The Finance Bill 2012 contains new SDLT rules and a new CGT charge to apply to disposals by non-UK resident owners other than individuals. This Tax Alert looks at the potential impact of these changes.

The key SDLT changes already in force are: a 7% rate of SDLT applicable to acquisitions of residential property interests after 21 March 2012 where the chargeable consideration for the property exceeds £2,000,000 and the 15% rate below does not apply, eg purchases by individuals. This applies to the purchase of real estate or interests in partnerships holding real estate, not the shares in a company. The previous 5% rate remains for purchases of residential property exceeding £1m, but not exceeding £2m; and consideration for a single dwelling exceeds £2,000,000 AND the acquisition is made by “non-natural persons” (ie bodies corporate, partnerships with a corporate partner or collective investment schemes) from 21 March 2012. This would apply to a company buying a property or an interest in a partnership owning property…

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