As noted below, the Chancellor announced a new 15% SDLT charge on the acquisition of UK residential property by “non-natural persons” where the consideration exceeds £2 million. The details published today explain that the charge applies to transactions which have an effective date (i.e. were completed or substantially performed) on or after 21 March 2012.
Transitional rules will exclude transfers where the contract was “completed” and signed by all parties to the transaction on or before 21 March 2012. It is unclear whether the reference to “completed” means that the transfer of the property must have taken place on or before 21 March 2012 or simply that the contract must have been “exchanged”.
The Budget notes explain that “non-natural person” will include companies, collective investment schemes (including unit trusts) and partnerships which have a non-natural person as a partner. This definition will catch all of the main types of entity which have traditionally been used to hold UK property.
The new charge will not apply to property developers and corporate trustees, but we do not have any details on the scope of these exceptions. It is unclear whether the following reliefs will apply to the new charge:
- bulk purchaser relief which was introduced in last year’s budget; and
- the rule that the acquisition of six or more residential properties is treated as the acquisition of commercial property (and so subject to a lower top rate of SDLT).
The full impact of the new charge will not be fully known until the draft legislation is published in Finance Bill 2012 on 29 March 2012.