Cold turkey for lunch

I suppose that, after the significant changes announced in last December’s Autumn Statement, it wasn’t surprising that the Chancellor had nothing new to say about SDLT in today’s Budget Speech. But, for Stamp Duty Land Tax practitioners, this experience of cold turkey for lunch on Budget Day is utterly novel. Today’s is the first Budget Speech since SDLT was announced in 2002 to say absolutely nothing about SDLT. Even the rates remain unchanged.

Nothing unexpected was said about the Annual Tax on Enveloped Dwellings (“ATED”) either.

So I’m reduced to recycling last year’s news about ATED given that it comes into force in a fortnight’s time on 1 April 2015 when the ATED threshold comes down from £2m to £1m.

Companies and other non-natural persons (“NNPs”) owning or having an interest in a dwelling worth more than £1m but less than £2m will be liable to pay £7,000 in ATED unless one of the reliefs (see below) can be claimed. Moreover, even if a relief can be claimed and no ATED is due, the NNP must file an ATED return by 30 April.

The reliefs are:

  1. Property rental businesses (to include the special conditions for sale, demolition, and, conversion)
  2. Dwellings opened to the public
  3. Property developers (including qualifying exchange of dwellings interests)
  4. Property traders carrying on a property trading business
  5. Financial institutions acquiring dwellings in the course of lending
  6. Dwellings used for trade purposes (occupation by qualifying employees and partners)
  7. Farmhouses (occupation for the purposes of carrying on a trade of farming)
  8. Registered providers of Social Housing
  9. Charity relief

All reliefs are available only if certain conditions are satisfied. In particular, reliefs 1, 3, 4 and 5 are denied if a non-qualifying individual (“NQI”) occupies the dwelling even for just one day. In over-simplistic terms an NQI is an individual connected (in the tax sense) with the non-natural owner of the dwelling. Thus companies hoping to claim these reliefs in a fortnight’s time have only two weeks to re-house any NQIs currently in occupation. Similar rules apply to the others except reliefs 2 and 7 above.

The ATED threshold comes down again on 1 April 2016, so a dwelling worth more than £500,000 on that date will fall within the scope of ATED if an NNP has an interest in it.

Happily for NNPs owning multiple dwellings, it appears that the proposed reductions in the number of returns required will come into force very soon. We must hope this happens before the 2015 filing deadline date of 30 April.