If you have acquired a residential property with an annexe since 1 April 2016 (or are in the process of so-doing), the correct level of Stamp Duty Land Tax (SDLT) payable may bizarrely remain unknown.
In his Budget statement on 16 March, the Chancellor sought to increase the tax burden on those acquiring a second (or subsequent) property through the introduction of higher rates of SDLT. The unfortunate side effect to these new rules was to impose these higher rates of tax automatically to properties that came with an annexe (or “Granny Flat”).
A subsequent parliamentary statement by David Gauke (Financial Secretary to the Treasury) confirmed that this was not the Government’s intention, and that the proposals contained in the Finance Bill would be amended. However, no mention was made of the nature of the amendments, nor the timetable for them.
Nearly two months after the Finance Bill was first published, we are still none the wiser. Public statements that an annexe worth up to one third of the total transaction value, and falling within the grounds of the main home, would not be brought into the higher tax regime are thus far unsupported by legislation. This despite being applicable to relevant purchases made since 1 April 2016.
So where does that leave a new property owner? Potentially with one of three possible levels of SDLT payable on the same property transaction. So much for tax simplification!
If you would like to discuss a recent or proposed property acquisition, please contact David Buck, Senior Tax Manager, on 01788 539000.