Summary of rates for Stamp Duty Land Tax on residential property and the Annual Tax on Enveloped Dwellings

21 May 2015


Our private capital experts provide a summary of rates for Stamp Duty Land Tax on residential property and the Annual Tax on Enveloped Dwellings.

Brief summary of SDLT residential rates with effect from 4 December 2014

The United Kingdom (UK) Chancellor of the Exchequer announced at the Autumn Statement on 3 December 2014 that Stamp Duty Land Tax (SDLT) was being reformed for purchases of residential property with effect from 4 December 2014.

A purchaser who exchanged contracts before midnight on 3 December 2014 could choose whether the new or old SDLT rules and rates should apply.

Under the new rules, rather than pay tax at a single rate on the entire purchase price, a purchaser of UK residential property pays the rate applicable to the part of the price within the relevant band.

The rates are, as follows:

  • £0 to £125,000 - 0%
  • £125,001 to £250,000 - 2%
  • £250,001 to £925,000 - 5%
  • £925,001 to £1,500,000 - 10%
  • £1,500,001 and over - 12%

For lower value properties, the new rates give rise to a lower SDLT charge than would have been the case under the applicable rates prior to December 2014.

For a higher value property, however, the SDLT charge may be significantly greater than would have been the case under the old rates. The tipping point occurs at approximately £937,500.

For a property purchased for £10 million, for example, SDLT would be £1,113,750 under the current rates, whereas it would have been £700,000 at the old rate of 7% for properties valued over £2 million.

SDLT for residential property purchased by a company or other non-natural person

For residential property costing over £500,000 acquired for private use through a company or other relevant non-natural person (such as a collective investment scheme or partnership with at least one corporate partner), higher rate SDLT at 15% continues to apply.

However, if an appropriate relief applies, for example, if the residential property is used for a property rental or development business, the new residential rates will apply instead.

Brief summary of ATED rates with effect from 1 April 2015

The Annual Tax on Enveloped Dwellings (ATED) was introduced in April 2013 as part of a package of measures, which included higher rate SDLT and the ATED-related CGT charge) to tackle perceived tax avoidance through the use of corporate vehicles to hold UK residential property.

A number of significant changes have been made to the regime since it was introduced affecting the values of properties it applies to and the rates charged. These are, as follows:

  • For the chargeable period from 1 April 2015 to 31 March 2016, the ATED charge on properties worth over £2 million held through such vehicles increased by 50% above inflation.
  • A new ATED band for properties valued over £1 million and up to £2 million has also been introduced with effect from 1 April 2015.
  • An additional band for properties valued over £500,000 and up to £1 million will come into effect from 1 April 2016.

The ATED rate increases and rates for the new bands are, as follows:

  • Property valued over £500,000 and up to £1m: currently £0, will be £3,500 from 1 April 2016;
  • Property valued over £1m and up to £2m: previously £0, is £7,000 from 1 April 2015;
  • Property valued over £2m and up to £5m: previously £15,400, increased to £23,350 from 1 April 2015;
  • Property valued over £5m and up to £10m: previously £35,900, increased to £54,450 from 1 April 2015;
  • Property valued over £10 million and up to £20m: previously £71,850, increased to £109,050 from 1 April 2015; and
  • Property valued in excess of £20m: previously £143,750, increased to £218,200 from 1 April 2015.

Clearly, these are significant increases, particularly given that this is an annual, rather than one-off, charge.

For more information about this subject please contact the Private Capital team.


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.