Additional 5% rate for residential property
A new 5% rate of stamp duty land tax will be introduced for purchases of residential property over £1m.
Who will be affected?
This will affect purchasers of UK residential property.
It will take effect from 6 April 2011.
The measure is purportedly to fund the two-year extension to the 0% threshold for first-time buyers of residential property. However, it is odd that the rate will take effect one year after the extension to the threshold and, unlike the extension to the threshold, there is no suggestion that the additional rate will be temporary. As with the current rate bands, the additional rate will likely distort the housing market, particularly in the run-up to its introduction. Recent data from the Land Registry shows that 480 properties were sold for over £1 million in November 2009.