The Budget 2005

• Introduction

• Personal tax

• Employment issues

• Corporate & Business Tax

• Capital taxes and Trusts

• Stamp duty land tax

• VAT, Excise & other duties

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) residential threshold

The threshold for residential transactions is being raised from £60,000 to £120,000.

This means that no SDLT will be payable where the purchase price of a property does not exceed £120,000. Above that figure the 1% band comes fully into play. This change means that the purchaser of a property costing £100,000 will now save £1,000.

The change will affect property transactions where completion takes place on or after 17 March 2005.

Comment
The change was well trailed, although the new limit is higher than many predicted. It is good news for first time buyers.

SDLT changes to disadvantaged areas relief

A significant number of areas in the country are designated as disadvantaged areas and any transaction involving a commercial property in such an area was exempt from SDLT. The Chancellor has decided to withdraw that relief with immediate effect and normal rates of SDLT will apply to transactions entered into on or after 17 March 2005. This means that any commercial property transaction of over £150,000 will attract SDLT.

Where a contract was entered into on or before 16 March 2005 and completion has not yet taken place, the old rules will continue to apply. This is provided that the contract is not varied or assigned before completion and the transaction is not the exercise of an option or right of pre-emption.

The purchaser of a commercial building in a disadvantaged area costing £400,000 will now face an SDLT charge of £12,000.

Residential properties in disadvantaged areas have a threshold of £150,000 before SDLT is payable. This remains unchanged.

Comment
This is really bad news for those seeking to develop businesses in disadvantaged areas.

SDLT anti-avoidance measures

The tax planners have clearly been busy identifying loopholes in the SDLT legislation and the process of blocking those loopholes has now begun. A range of anti-avoidance measures is to be introduced to deal with a variety of schemes.

In addition the Chancellor is bringing schemes to avoid SDLT on commercial property into the regime which requires scheme providers to make early disclosure to H M Customs and Revenue. This measure will be effective for schemes or arrangements made available or implemented on or after 1 July 2005.

Comment
It was predictable that the planners would get to work on SDLT and the Chancellor’s reaction was equally predictable.

[Back to top]

Disclaimer - for information of users
This summary is published for the information of clients. It provides only an overview of the main proposals announced by the Chancellor of the Exchequer in his Budget Statement, and no action should be taken without seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.