The Chancellor George Osborne announced some significant changes to stamp duty land tax in the recent Budget and both consumers and businesses need to be aware of the situation going forward.
Mr Osborne signalled the government’s intention to crackdown on those it believes are avoiding paying their fair share of stamp duty through complicated and immoral means.
The biggest announcement was the introduction of a new seven per cent rate of stamp duty land tax on properties costing above £2 million.
Prior to the Budget, a rate of stamp duty of five per cent applied to all homes costing above £1 million.
In addition, Mr Osborne revealed that those who purchase properties through companies in a bid to reduce their SDLT bill will have to pay a rate of 15 per cent.
But what about those buying commercial property?
Businesses struggling with the current economic climate can breathe a sigh of relief, as the Chancellor made no changes to the rates of stamp duty land tax charged on commercial property.
This will come as a huge boost to commercial enterprises looking to move premises to put them on a more sustainable footing going forward.
For non-residential or mixed-use properties, such as coffee shops, offices, agricultural land and other property which is not used as a dwelling, the same rates that were in place before the Budget was revealed remain in place.
Properties up to £150,000 with an annual rent under £1,000 do not incur stamp duty land tax.
If you intend to purchase a property costing up to £150,000 with an annual rent of more than £1,000, a one per cent rate of SDLT will apply.
Buildings costing between £150,000 and £250,000 will also incur a one per cent rate, while those in the £250,000 to £500,000 bracket will incur a rate of three per cent.
This rises to four per cent for properties above £500,000.
While the Chancellor has left commercial stamp duty rates untouched, that does not mean that the government is turning a blind eye to companies it believes are trying to avoid paying stamp duty land tax.
What this means is that you must choose a reputable and successful stamp duty mitigation firm if you intend to take out a large property purchase price mortgage.
There are many stamp duty planning companies in operation, however, some employ more effective and less aggressive means of reducing your bill than others.
Given the government’s determination to ensure consumers and businesses are acting in a legal and moral way, choosing the right firm can be the difference between you achieving notable savings or not.
A good stamp duty mitigation company will submit their schemes to a top tax QC who will go through them with a fine-toothed comb and only once the tax expert has given their approval will they proceed with the plan.
You must also enquire about how successful the company has been with its schemes. A reputable firm will have close to a 100 per cent record of success.
Times are tough for businesses, so it is important that you make every penny count. With stamp duty planning, you could potentially save thousands of pounds, which can be reinvested into the business, so why not see if you can save?
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