In the 2012 budget George Osborne announced various changes to Stamp Duty Land Tax (SDLT) for valuable residential properties.
This was widely interpreted as a measure aimed at foreigners buying valuable properties in London's West End. Less attention has been paid to how the charges might affect the countryside.
Initially headlines focused on the increased rates of SDLT payable on property purchases. In particular the rate of SDLT on residential property purchases over £2 million has been increased to 7%. Furthermore, if the purchase is made by a company or various other "non-natural persons" the SDLT rate is increased to 15%.
This rate is designed to be penal, since when a valuable property owned by a company comes to be sold, it is common for the entire company to be sold, attracting stamp duty at half of 1% on the sale of the shares and avoiding SDLT at 7% on the transfer of the interest in the property itself.
These changes only come into effect when a property is purchased or sold, and therefore on the whole they are not immediately important. But an "annual charge" is being introduced from April 2013 which might have serious implications for some country property.
The annual charge will apply to residential property valued at more than £2 million and owned by a company or certain other "non-natural persons". This would include a partnership which has a corporate member as one of the partners. Where such a situation exists, an annual SDLT charge ranging from £15,000 to £140,000 will be imposed.
These days it is not too uncommon for the principal dwelling on a farm or country estate to be valued at more than £2 million. If that dwelling belongs to a company, or to a partnership with a corporate member, the annual charge is likely to apply.
This might, for example, catch instances where a farmhouse is included in an agricultural tenancy and a company appears somewhere in the structure, perhaps as one of the partners in the farming partnership which holds the tenancy. It is easy to see that situations will arise where the SDLT annual charge is payable in the countryside.
The good news is that we have until April to address this matter, and there will be many cases where action can be taken to avoid the SDLT annual charge.