We understand that HMRC are minded to recommend ministers agree to a very wide range of exceptions to the 15% rate of SDLT for £2m+ residential property.
We understand that any changes will not be retrospective but that HMRC may recommend the following for next year’s Finance Bill:
- exception for genuine property investment, to include long leases on ground rents and licences (eg holiday lets), with some kind of rule that occupiers cannot be connected with owner;
- no two year rule for developers: they will just have to show development is not for own occupation;
- exception for historic dwellings with some public access;
- exception for dwellings with other business income (or available for business use); and
- exception for dwellings with no income but not owner-occupied e.g. properties owned by employers for short-term accommodation of staff.
It would seem that entities holding property with these uses will not be subject to the annual charge either.
It is understood that all the existing exemptions, eg charities, should apply to the annual charge.
The above would be good news although with some complication, as presumably each one of the exceptions will need specific anti-avoidance provisions. It should be noted that we are still at an early stage of the Government process in relation to these rules and the final rules may not be as generous as the potential recommendations set out below. Please note that this information is not confirmed by official sources and should therefore not be acted on without taking further detailed advice.