What is the impact of Stamp Duty Land Tax?

Kate Ervine
Kate Ervine

The Budget has been and gone and, amongst other things, it left behind changes to Stamp Duty Land Tax (SDLT), something which affects farmers more than you might think.

SDLT applies when you purchase a property or land over a certain value - £125,000 for residential property and £150,000 for non-residential/mixed use property - with the rates payable varying according to its use.

Naturally, the farming community will be concerned with how any changes impact on purchases of agricultural land. Most purchases of this nature will see a slight reduction in the SDLT due, however, it is important not to underestimate how the changes to SDLT and residential property could affect you, your farm and your family.

Post-Budget, there is an increase in the SDLT payable when you purchase residential property in addition to your farmhouse. For example, if you buy an additional property worth £125,000, the changes equate to an extra £3750 out of your pocket.

In other words, the new rules could mean thousands of pounds of extra cost when you take common and, in many cases, sensible decisions, for example:

l In planning for your future by acquiring a retirement home

l In diversifying your business interests beyond farming by purchasing a buy-to-let

l In helping your children onto the property ladder by aiding them in buying their first home

Furthermore, beyond the obvious situations, SDLT contains hidden perils and traps that need to be carefully considered. For instance, it is important to remember that you can be taken to “own” property even when you only have a small share in it. It is not uncommon for young farmers to own a share of, or have an interest in, the family farm. If such a person were to purchase a home of their own, they could incur the SDLT charge.

While there may be potential avenues available in order to manage SDLT liability any route is entirely dependent on your personal situation.

SDLT represents a substantial financial burden that, simply, most people could do without, and it poses dangers that are not always clear at first glance.

If you are concerned about the SDLT implications of any of your plans, you should seek the aid of advice tailored specifically to you, because while your situation may pose particular problems, these can give rise to particular solutions.

Kate Ervine is a Director in Commercial Property and Probate at Portadown based solicitors firm JPH Law Limited.

For further information on JPH Law visit: www.jphlaw.co.uk or contact Kate on kate@jphlaw.co.uk T 028 38 333 333.