The Budget on 6 March contained one significant SDLT announcement which had not been seen coming, the abolition of multiple dwellings relief (“MDR”).
MDR was introduced to the SDLT regime in 2011 and provides relief for purchases of, as the name suggests, multiple dwellings acquired in, or as part of, the same transaction (or across linked transactions) and essentially means SDLT is calculated on...
Read more
Property Tax Bite – “Tax Day” – Possible reforms to the Construction Industry Scheme
Last Thursday 27 April was “Tax Administration and Maintenance Day”, which involved the publication of various consultations and proposals on tax measures, and the promise of more consultations to come.
Of most of interest to those advising on property tax matters was the publication of a consultation on proposed...
Read more
The basic rule, albeit subject to numerous exceptions, is that a sale or lease of a property is exempt from VAT.
The most commonly encountered exception to that rule for non-residential property is where the person making the supply has opted to tax the relevant property for VAT purposes, resulting in the supply being subject to VAT at the standard rate of 20%.
Whether or not a seller or landlord...
Read more
Property Tax Bite – SDLT – Mixed use and MDR update – and “mini-Budget” 2022
In our last Tax Bite, we noted that a consultation had been launched on whether to update the SDLT rules around mixed use purchases (i.e. involving both residential and non-residential land) and multiple dwellings relief (MDR), where two or more dwellings are purchased in a single transaction.
The consultation has...
Read more
Property Tax Bite – Simplifying VAT on Land and Property?
There is no doubt that the VAT treatment of land and property is complex. Starting from the most basic statement, set out in the legislation, that interests in land are exempt from VAT, the exceptions to that rule come thick and fast, and that is before considering zero-rating and reduced rating of certain supplies, and exceptions to the...
Read more
Property Tax Bite – SDLT sub-sale relief
In sub-sale transactions, the availability of relief from SDLT for the intermediate purchaser is crucial.
In most commercial sub-sales, the facts should support the relief being available, but as ever there are issues and pitfalls to watch out for. In this Tax Bite we very briefly summarise the key requirements for a “normal” sub-sale where A enters into a...
Read more
VAT - Property TOGCs – Tips, reminders, pitfalls
Here’s our ten starters for ten on property TOGCs:
1. Does the Buyer need to opt to tax? It is often assumed that the Buyer always has to opt for the transfer to be a TOGC, but that’s not correct. The Buyer only has to opt if the sale would otherwise be VATable, e.g. if the Seller has opted or the sale is of a “new” commercial freehold, so...
Read more
In response to the COVID-19 pandemic, HMRC began a paperless process for stamping stock transfer forms and applications for stamp duty reliefs on 27 March 2020. It was first announced as a temporary measure, but has since been confirmed to be permanent, with physical stamping now a thing of the past.
Most corporate lawyers and others involved in dealing with the administrative side of stamping...
Read more
HMRC have recently published new guidance (available here) on the VAT and SDLT implications of certain lease variations. In spite of HMRC’s statement that there is no change in policy, the VAT guidance represents a move away from what many advisers might previously have considered the position to be on certain lease amendments, where each party “gives something” to the other.
The new guidance has...
Read more
As has been widely publicised, the Chancellor announced a temporary reduction in the rates of residential SDLT** as part of the government’s “mini-Budget”. The nil rate band for all residential property will be increased to £500,000 (from £125,000) effective immediately and until 31 March 2021, in the hopes of both supporting the housing market as it recovers from its hibernation during the...
Read more
Covid-19 is creating challenges for the whole country, but there will undoubtedly also be some opportunities too. This tax bite looks briefly at some of the tax-related opportunities that could exist in relation to property in the current climate.
With predictions that property prices may reduce in the short term as a result of Covid-19, now may be a good time to consider extracting expensive...
Read more
Companies with valuable property (or other) assets sat in their trading companies should consider reorganising their structure to try to ring-fence these valuable assets from trading risk.
If there is already a group structure, then it should be relatively straightforward to transfer assets to achieve this commercial aim. There are some tax points to consider before doing so, not least VAT and...
Read more
