The anti-avoidance measures introduced in 2012 and 2013, which apply to residential properties of a value of at least £2 million, will now apply to such property worth £500,000 or more. The measures are aimed at owner-occupiers (and empty properties), and therefore reliefs continue to be available for property investors, developers and traders. They also only relate to properties purchased by certain non-natural persons (principally companies).
The measures announced are the extension of the Stamp Duty Land Tax 15% rate to residential dwellings worth more than £500,000, when previously it only applied to dwellings worth more than £2 million. This takes effect from 20 March 2014.
Two new rate bands for the Annual Tax on Enveloped Dwellings (ATED) will also be introduced to bring the properties worth more than £500,000 into charge. The first band will apply to residential properties worth more than £500,000 and up to £1 million imposing an annual charge of £3,500 from 1 April 2016. The second band will apply to properties worth more than £1 million and up to £2 million imposing an annual charge of £7,000 from 1 April 2015. These measures create an administrative burden for genuine property rental, trading and development companies as they have an ATED return to complete even though they have relief from the annual charge.
The ATED-related capital gains tax charges will also apply to the new bands.
Another consultation is to be published, with changes to have effect from April 2015, on legislation to be introduced to charge capital gains tax on non-residents disposing of UK residential property.
The rules announced in the Autumn Statement 2013, to prevent high earning non-domiciled individuals avoiding UK tax by dividing their duties of a single employment between a UK and an overseas contract, are adapted to prevent charges arising on dual contracts which are not motivated by tax avoidance.
Joanne Routier, Head of Tax Services for Bracken Rothwell Ltd, would be delighted to assist with any ATED matters as well as any other tax matters.
Her direct line: +44 (0) 1534 511770