Stamp Duty and SDLT

Rates

Once again, stamp duty land tax (SDLT) rates are going up in the Budget in relation to residential property. The following two measures have been announced to take effect from midnight on 31 October (i.e. for all transactions after Budget Day, but with transitional relief available for acquisitions pursuant to a contract dated before 31 October):

• the higher rates applicable to dwellings (HRAD) surcharge rate is going up from 3% to 5%; and

• the flat rate of SDLT applicable to certain acquisitions by non-natural persons is going up from 15% to 17%.

The HRAD rates are payable by individuals purchasing additional residential properties and for all corporate acquisitions of residential properties unless six or more dwellings are bought in the same transaction or the acquisition is of mixed use property. The flat rate of 17% potentially applies to all corporate acquisitions of dwellings worth more than £500,000; however, it is rarely paid due to the wide availability of reliefs, including in respect of any purchases intended for commercial letting or for use in a commercial trade.

This newest rate increase means that the top rate of SDLT potentially applicable to residential purchases in England and Northern Ireland is 19%, if both HRAD / the flat rate and the 2% surcharge applicable to non-resident purchases apply.

What didn’t change?

The rates applicable to acquisitions of non-residential property remain the same. In addition, it remains the case that an acquisition of six or more dwellings in a single transaction will generally be taxed as a non-residential acquisition. As residential property acquisitions continue to get more expensive in SDLT terms, expert advice on the distinction between residential and non-residential property from an SDLT perspective becomes ever more valuable.

Mixed-use property acquisitions also remain subject to the non-residential rates on the entire consideration. The previous government had consulted on the introduction of apportionment for such acquisitions, but abandoned those plans earlier this year.

The timing for the end of the adjusted rate thresholds has also not changed, and buying residential property will become even more expensive in SDLT terms from 1 April 2025, when some of the rate thresholds will reduce.

No further changes were announced to stamp duty rates and thresholds. For a full table of the main tax rates and allowances, see here.

Stamp taxes reform

In spring 2023, the government launched a consultation on proposals to put an end to stamping by introducing a new single tax on transactions in securities, largely based on the existing SDRT framework. The consultation on replacing Stamp Duty and SDRT with a new single tax on transactions in securities ran until 22 June 2023. There were hopes that the Budget might pick up this sensible suggestion for reform, but there remains no sign of any response to the consultation as yet.

PMI sandbox and PISCES related changes

Following the Spring Budget 2024, the government launched a consultation on the proposal to develop the Private Intermittent Securities and Capital Exchange System (PISCES); a new type of trading platform providing for the intermittent exchange of shares in companies not admitted to trading. By launching PISCES, the government intends to provide a helpful means for (1) companies to scale up and grow, (2) shareholders to realise their gains and (3) investors to access a wider range of companies.

Although the response to the consultation has not yet been published, the government notes that stakeholders asked for clarity on the stamp duty and stamp duty reserve tax treatment of such trades.

At the Autumn Budget 2024, the government announced that HM Treasury will be granted powers to make changes to the stamp duty and stamp duty reserve tax legislation to introduce a specific exemption from stamp duty and stamp duty reserve tax for PISCES related transfers. An exemption from stamp duty and stamp duty reserve tax on PISCES related transfers will be attractive to investors, as is currently the case for unlisted shares traded on recognised growth markets.