News and Blog
The Chancellor of the Exchequer is reported to be receiving a record high revenue from Stamp Duty Land Tax (‘SDLT’) but the number of property transactions has fallen. The tax, particularly the Higher Rate charged to those who already own a property, is clearly proving costly for purchasers and may be swaying decisions as to whether to purchase.
For those who remain keen to invest in the property market, the acquisition of a mixed use property could result in a flat 5% tax rather than the staggered higher rate charged to those existing property owners . For example, under the current rates, a house costing £600,000 would incur SDLT of £38,000 for someone who already owns at least one other property. If part of the property was used as a dental practice however, this would be classed as Mixed Use and £19,500 SDLT would be payable. A significant difference, with the gap widening as property values increase. Consider the same scenario with a property valued at £1,500,000. SDLT at the higher rate would be £138,750 but would be less than half – £64,500 if the property is ‘mixed use’.
HMRC collect the tax but it is the responsibility of the purchaser to correctly declare whether mixed use applies. The definition relates to whether the property incorporates both residential and non residential elements. Although some properties – as with the example above, have a commercial use which is quite evident, others may be less certain and would need thorough analysis.
The benefit of the lower, mixed use tax is obviously of benefit to purchasers, but should also be a careful consideration for those looking to place their properties on the market, and early advice should be obtained.
The Chancellor of the Exchequer is due to provide his Autumn Budget on Wednesday 22nd November 2017. We wait to see if there will be any further changes to SDLT and the mixed use policies.
Do I need a solicitor to buy a piece of land?
At WSP, our commercial property solicitors handle all matter associated with buying a piece of land. Commercial Property Solicitors will have responsibilities such as: reviewing the contract for sale, preparing...
Gazumping and gazundering – perils in an uncertain market
Research suggests that nearly a third of recent sellers have suffered gazundering, which property pundits attribute to a downturn in the market. But, in some areas, the lack of suitable...
Why do Solicitors require source of funds in property transactions?
When your solicitor asks for bank statements dating back months, please believe us when we say they are not just being difficult! Gemma Francis, a Conveyancer in WSP Solicitors’ Residential...
Contact our office
Get in touch
