Multiple Residential Purchases – SDLT Relief
HM Revenue and Customs have published draft guidance and worked examples for the new Stamp Duty Land Tax (SDLT) Relief for multiple residential purchases
This relief was first announced in the March 2011 budget. It is designed to boost the residential property market
and is likely to be in force by July 2011.
Currently, a purchaser who acquires a residential property portfolio
will be liable to pay SDLT
at the rate determined by the "aggregated chargeable consideration". When the new relief comes into effect, purchasers acquiring multiple dwellings in a single transaction or linked transaction
will be able to calculate the rate of SDLT
based on the mean consideration
A Landlord purchases 3 terraced houses together in a single transaction. Each house is valued at £200,000. Under current rules, the aggregated chargeable consideration would be £600,000. This would mean that SDLT would be paid at a rate of 4%. This would result in a Tax bill of £24,000.
When the new scheme comes into force, the average value of the consideration would be used to calculate the rate of SDLT. In our example, the average consideration would be £200,000. This would mean that SDLT is payable at 1% (the minimum rate under the scheme). This would result in a Tax bill of £6,000.
Off Plan Purchases
The relief is also available for "off plan" purchases where building work has yet to begin. However, for off plan purchases, a further SDLT return (and possibly additional Tax) may be due if the number of dwellings changes within 3 years from the date of the transaction.
Disadvantaged Areas Relief
The Finance Bill 2011 also states that no disadvantaged areas relief can be made where multiple residential purchase relief has been requested.