The changes to Stamp Duty Land Tax (SDLT)  on residential property purchases introduced in the Chancellor's Autumn Statement from 4 December 2014 include a new 'tapering' of rates instead of the previous 'slab' system.  The new rates are set out below:

Residential property  Purchase price of property	Rates paid on the part of the property price within each tax band (%)
£0 - £125,000	0
£125,001 - £250,000	2
£250,001 - £925,000	5
£925,001 - £1,500,000	10
£1,500,001 and above	12

So, if I buy  a house now for £600,000 the SDLT is £20,000 (being £350,000 at 5%, £125,000 at 2% & 125,000 at 0%) compared with £18,000 previously (being £600,000 at 3%).  The break-even point between the old and the new rates is a purchase price of £500,000 (SDLT of £15,000).

However, the SDLT rates for non-residential or mixed properties were not changed and so this must be remembered when buying a residence as part of an estate, farm or other mixed purchase.  The rates for non-residential or mixed properties (maximum 4%) apply on a 'slab' basis as follows:

Non-residential & mixed property	Rate paid on total consideration (%)
£0 - £150,000	0
£150,001 - £250,000	1
£250,001 - £500,000	3
£500,001 and over	4

Therefore, if a farm or estate is purchased being a mixture of residential (eg a farmhouse) and non-residential property (eg farmland and barns) then the 'slab' rates (not the new residential rates) apply.  So the purchase of a farm including a farmhouse for a total of £1.6million would be liable to SDLT at 4% on the total (ie £64,000).

As with all such tax situations, advice should also be sought before proceeding.  For further details call Alan Boby on 01295 250401 or email aboby@ellacotts.co.uk

Alan Boby

Ellacotts LLP

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