19th June 2014
From 1 April 2015, a lower threshold between £1m and £2m is added. As such, dwellings (or residential properties) held by non-natural persons (NNPs) valued above £1m will now fall within the ATED rules. The value to be used is the value on 1 April 2012 if you owned the dwelling at that date or value when you acquired it, if that is later than 1 April 2012. The threshold is further reduced from 1 April 2016 to £500,000.
However, stamp duty land tax (SDLT) for acquisitions by NNPs of dwellings valued over £500,000 is now at 15%.
Relief from ATED and increased SDLT charge is available under specific circumstances e.g. used for commercial purposes. Anti-avoidance rules are in place to ensure the dwelling is not reverted back to private use in the near future.
Nevertheless, the use of corporate entities to hold residential dwellings still have its purpose but careful planning will be needed to mitigate any tax charges.
To discuss any of the above please contact Keng Cheong: firstname.lastname@example.org