The Government’s Finance Bill has confirmed that the 15 per cent stamp duty tax for £2 million-plus residential properties bought by ‘non-natural persons’ will go ahead.
In addition to the announcements published in the 2013 Finance Bill, a new annual charge of £15,000 to £140,000 - known as an “Annual Residential Property Tax” (ARPT) – will be payable by corporate vehicles.
ARPT breakdown:
|
Property value (£m) |
ARPT (£) |
|
£2m-£5m |
£15,000 |
|
£5m-£10m |
£35,000 |
|
£10m-£20m |
£70,000 |
|
£20m+ |
£140,000 |
Both measures were announced in Chancellor George Osborne’s March Budget and are intended to close an alleged £1 billion stamp duty loophole, whereby super-rich foreigners avoided the levy by putting expensive properties into the ownership of offshore companies.
When the rules are enforced on 1st April 2013 there will be exemptions made for ‘legitimate’ property businesses.
Those with more than two years’ trading history will be exempt and only liable for the lower 7 per cent stamp duty land tax (SDLT) announced in the Budget for ‘ordinary’ purchasers.
These businesses include developers, social landlords, traders and rental businesses. Such properties will also be exempt from the new ARPT.
The Treasury added that the rules would be strictly applied depending on the ownership structure of the property.
If a business cannot prove it owns the property for “genuinely commercial” purposes within three years it will be subject to an 8 per cent stamp duty “clawback”.
These amendments will help to ensure that foreign buyers pay their fair share of tax, while safeguarding genuine business investment in residential property.
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