Autumn Statement 2014: Property


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SDLT: revised structure, rates and thresholds for residential property

The government has published draft legislation that jettisons the current so-called “slab” system, under which SDLT is levied at a single rate on the chargeable consideration for a transaction (old rules), and replaces it with a “progressive” system, under which SDLT is charged at several rates according to the portion of the total consideration falling within each of several bands (new rules). This is aimed at correcting market distortions for properties with a value close to the existing borders separating SDLT rate increments.

The new rules will apply only to residential property transactions with an effective date on or after 4 December 2014, subject to transitional arrangements. Non-residential, mixed property and enveloped dwellings are unaffected by these changes.

The residential SDLT rates applicable under the old rules will be replaced with the following bands.

Property value band SDLT rate
£0 to £125,000 0%
Over £125,000 to £250,000 2%
Over £250,000 to £925,000 5%
Over £925,000 to £1.5 million 10%
Over £1.5 million 12%


For example, under the old rules, the SDLT charge on a residential property bought for £450,000 would be £13,500 (the entire consideration would be taxed at 3%). Under the new rules, the SDLT charge would be £12,500 (the first £125,000 would be taxed at 0%, the next £125,000 at 2% and the final £200,000 at 5%).

The effective rate of tax for properties with a chargeable consideration of £937,500 or less will be lower, or the same as, the effective rate of tax under the old rules. However, there will be an increase in the effective rate for most higher value properties. For example, a residential property bought for £1.25 million under the old rules would attract SDLT of £62,500 (effective rate 5%). Under the new rules, the charge would be £68,750 (effective rate of 5.5%).

Under transitional rules, buyers may elect to pay SDLT under the old rules in either of the following cases:

i)              The transaction is effected under a contract substantially performed before 4 December 2014.

ii)             The transaction is effected under a contract entered into before 4 December 2014 unless:

  • the contract (or assignment of rights under the contract) is varied on or after 4 December 2014;
  • the transaction is consequent on the exercise of an option (right of pre-emption or similar right) on or after 4 December 2014; or
  • there has been an assignment, sub-sale or other transaction relating to the whole or part of the subject matter of the contract resulting in another person having the right to call for a conveyance of the subject matter.

If a person has the right to choose to account for SDLT under the old or new rules, this is done simply by including the amount of SDLT in box 14 of the land transaction return (calculated according to which rules have been selected). Pending the development of HMRC’s IT systems, a stand-alone online calculator is available.

SDLT: multiple dwellings relief to be extended

The scope of multiple dwellings relief (MDR) will be extended to lease and leaseback arrangements of shared ownership properties entered into with a qualifying body (for example, a housing association).

Currently, the acquisition of a superior interest subject to a lease for an initial term of more than 21 years does not attract MDR. The amending legislation will be included in the Finance Bill 2015 and will take effect from the date that the Finance Bill 2015 receives Royal Assent.


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