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Changes to SDLT Mean Potential Tax Traps for Property Owners

Robert Maas at CBW accountants, tax and business advisers, comments

In his Autumn Statement, the Chancellor announced higher rates of Stamp Duty Land Tax (SDLT) for purchases of additional residential properties - such as second homes and buy to let properties - to come into force 1 April 2016. The Treasury's subsequent consultation document has provided more details about the application of the 3% surcharge initiated by the Chancellor and here Robert Maas of City-based CBW LLP warns of several potential tax traps that this reveals.

First and foremost, the proposal goes a lot wider than second homes: it applies to ALL purchases of residential property by companies and ALL purchases of residential property by most trusts. The exception is for trusts with an interest in possession (such as a life tenant) where trust purchases will be treated as made by the life tenant.

Further, where the purchase is by an individual, the 3% will apply if the individual already owns a residential property or an interest in such a property. It does not matter what the new property will be used for - although there will be an exception for the replacement of a main residence. Property owned by a person's spouse or civil partner will be treated as owned by the individual.

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