SDLT: The Impact on Rural Property

It was announced in December’s Autumn Statement that there would be some changes to the way Stamp Duty Land Tax is treated for residential property and instead of the current ‘slab’ system that is in place there would be a new sliding rate (similar to income tax) which would be effective from 3rd December 2014.

The ‘slab’ system distorted the prices of property as purchasers were reluctant to pay a price which took them into a higher tax band with the higher rate being paid on the whole price.

The change is to be welcomed and the new Stamp Duty structure is as follows:

•No tax payable on the first £125,000

•Between £125,000 and £250,000 the charge will be 2%

•Between £250,000 and £925,000 the charge will be 5%

•Between £925,000 and £1,500,000 the charge will be 10%

•Over £1,500,000 the charge will be 12%

As it’s a graded tax, you will only pay tax on the proportion of the house price that falls within each band and Chancellor claims that these changes will benefit 98% of home buyers whose homes are likely to fall within the lower end of the scale.

There has been no change to the way Stamp Duty Land Tax is calculated on non-residential property including land used for agricultural and forestry, land not used for a dwelling and commercial property. Farms usually qualify as non-residential and mixed-use properties for which the rate is capped at 4% above £500,000.

However, the changes to Stamp Duty may have an impact on smaller ‘lifestyle’ estates or country houses with land where a lot of the value is locked up in the residential property.

Therefore, if you are wanting to sell a country property or estate of this type, it may be a good idea to carefully consider whether it qualifies as mixed use or is liable for SDLT as residential property. 

If you would like to discuss how these changes might affect you, please contact Rupert Harrison or Adam Jaeban of our Rural Department on 01509 243720 or email propertyprofessionals@andrewgranger.co.uk