In a previous post, A pain in the annexe! we noted the confusion that could arise in determining the correct level of Stamp Duty Land Tax (SDLT) payable on the acquisition of a residential property with an annexe since 1 April 2016.

Thankfully some clarification has now been provided following the publication of the Government’s intended changes to the draft legislation; the re-draft provides that the higher rate charge will not apply to a property with an annexe provided:

1. The annexe forms a part of the same building as the main property or is in the grounds of the main property, and;
2. The value of the main property is at least two thirds of the value of all the purchased properties within the grounds.

The revision should provide some relief to property purchasers, given the substantial increase in SDLT that would otherwise have been payable as a result of the new higher rate charge.

Notwithstanding this revision, whether the normal or higher rates SDLT apply, purchasers of residential property with an annexe (or any other form of secondary accommodation) should take advice regarding their acquisition, as significant SDLT savings may be obtained.

If you would like to discuss a recent or proposed property acquisition, please contact David Buck, Senior Tax Manager, on 01788 539000.