Stamp Duty Land Tax

Limited companies not exempt from 3% Stamp Duty: Budget 2016

In a shock move, a policy statement supporting the 2016 Budget confirmed investors buying residential property inside a limited company tax wrapper will still be hit by the 3% surcharge.

In a bid to sidestep the 3% premium, thousands of landlords have been placing residential property investments into limited company shells since the consultation was announced in the Autumn statement last November.

Today, the government confirmed only properties worth less than £40,000 along with houseboats and caravans will be exempt the surcharge, regardless of tax wrapper.

Chancellor George Osborne said in his speech, larger landlords would not be exempt the extra charge with many previously speculating that landlords with 15 or more properties may be exempt.

However, today’s policy statement quashed all speculation and said: “Companies purchasing residential property will be subject to the higher rates, including the first purchase of a residential property.”

This is a tax charged on the purchase of a property and the amount of tax payable is dependent of the purchase price.

Property Purchase Price
£0 – £125,000 = 0%
£125,001 – £250,000 = 1%
£250,001 – £500,000 = 3%
£500,001 – £1 million = 4%
£1 million + = 5%

First time buyers
The first time buyer’s £250,000 threshold applies from 25 March 2010 up to 24 March 2012 inclusive.

There is no indication that this incentive will be extended.

The Government has announced that it is no longer going to extend the stamp duty holiday for first-time buyers as it claims the policy has failed to increase the number of first-time buyers entering the market.

The Chancellor George Osborne has failed to extend the stamp duty holiday beyond its end date of March 2012, despite calls to do so from industry bodies such as the Council of Mortgage Lenders.

In the 2010 budget, then Chancellor Alistair Darling announced the stamp duty threshold would double from £125,000 to £250,000 for first-time buyers but announced an increase in the rate for properties worth more than £1m from 4 per cent to 5 per cent. The stamp duty holiday is due to end on March 25, 2012.

The autumn statement says: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first-time buyers entering the market.

“This relief will therefore end on March 24 2012 as planned.

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