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Comments on the SDLT treatment of funds established as PAIFs and TTFs are set out later in this summary.
Gains on UK residential property by non-residents
Since 6 April 2015, gains on the disposal of UK residential property by non- resident persons are subject to Capital Gains Tax. This has created complexities.
The gain accruing on the disposal of a residential property can, in certain circumstances, be divided into different components with each being chargeable under different rules to different persons at different rates. The components are, in priority order:
First, the amount of post-April 2013, 2015 or 2016 (as the case may be) gain that is chargeable at 28% because the property is also chargeable to the annual tax on enveloped dwellings (ATED).
Second, the amount of post-April 2015 gain that is chargeable on non-residents.
Third, the amount of balancing gain that is neither of the first two components. This balancing gain is potentially chargeable under anti-avoidance rules that attribute gains accruing to non-UK resident companies to participators in the company and trusts to UK residents.
The changes aim to ensure there is neither double-counting nor gains that are undertaxed.
A couple of very specific ATED reliefs
Of minority interest, but highly relevent to those involved, the Finance Bill introduces two very specific ATED reliefs.
ii). The SDLT rate on leases will increase to 2% where the net present value of the rent is more than £5m.
iii). A 3% SDLT surcharge for additional residential property was announced in the Autumn Statement last year. Our comments from the time can be found here. The resulting SDLT rates are:
Despite extensive industry lobbying, the Budget did not include an exemption for institutional investors, much to the annoyance of the industry. The position is made more complex by the availability of Multiple Dwellings Relief (MDR) and the applicability of commercial SDLT to transactions of more than six properties.
MDR was introduced in 2011. The relief operates by using the average value of the units/flats within a property, rather than the gross purchase price, to determine the SDLT rate applicable on a sale. Previously there was a minimum rate of 1%. As the MDR does not eliminate SDLT, the rates will now average 3% or above, which has an impact on the interaction with another SDLT provision. Where a sale comprises six or more dwellings, the transaction is treated as commercial rather than residential, and the normal commercial rates apply. The new rates for commercial property are set out above. This treatment as commercial property is disregarded where multiple dwellings relief is claimed.