The Annual Tax on Enveloped Dwellings (ATED) is a tax payable by certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect certain companies, partnerships with company members and managers of collective investment schemes described in the legislation as NNPs.

To value a property, you can use a professional valuer or determine your own valuation. The valuation of the property must be in pounds sterling. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount.

The valuation date depends on when you owned the property.

The valuation dates are:

• an initial valuation date,
• a revaluation date.

There are fixed revaluation dates for all properties, every 5 years after 1 April 2012, for example on 1 April 2017, 1 April 2022 and so on, regardless of when the property was acquired.

The value of the property for any chargeable period is therefore the later of:

• its initial valuation date,
• the revaluation date.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs if a property is used for commercial purposes.

Stamp Duty Land Tax (SDLT) is payable whether you buy a freehold property, a new or existing leasehold property or a shared ownership property. SDLT has been replaced in Scotland by the Land and Buildings Transaction Tax and in Wales by the Land Transaction Tax.

The amount of SDLT you pay when you buy a leasehold property, depends on whether it’s an existing lease (an assigned lease) or a new one. There are also different amounts of SDLT payable depending on whether you are buying residential or non-residential property.

SDLT on an existing lease, described as an assigned lease, is usually based on the lump sum paid for the assignment of the lease. In most cases, the amount of SDLT due is worked out in the same way as if the purchaser had bought a freehold residential or commercial property.

SDLT on new leases is payable both by reference to lease premiums and to the rental element of a lease. The premium is broadly treated for SDLT purposes as if it was a payment for the purchase of a freehold. In cases where SDLT is payable, both the lease premium or purchase price and the net present value of the rent payable are calculated separately and then added together to obtain the amount of SDLT payable. For non-residential properties the nil rate band does not apply if the relevant rental figure for the lease is more than £1,000 per year.

The biggest prize from the recent Budget went to first-time home buyers after the Chancellor announced changes to the Stamp Duty Land Tax (SDLT) rules. With immediate effect from Budget day, SDLT has been abolished for first-time buyers making a purchase of up to £300,000. Unlike the temporary Stamp Duty holiday that applied from 2010-12 this change has been made permanent.

The Chancellor also extended the relief to the first £300,000 of the purchase price on properties valued at up to £500,000 resulting in SDLT savings of up to £5,000 compared to other house buyers. These changes have the effect of increasing the nil-rate threshold from £125,000 to £300,000 for first-time buyers of properties costing up to £500,000. There is no relief available for first-time buyers spending more than £500,000 on a property.

There are a number of requirements that must be met in order to qualify for the relief. The relief is only available for those purchasing a house for the first time. The purchaser can never have previously owned any share of a property in the UK or anywhere else in the world. The qualifying criteria are extended to both partners when buying a house jointly.

This measure should help boost property sales in a subdued market as the buy-to-let market has shrunk and concerns about Brexit continue. It has been estimated that this relief will help a million first-time buyers over the next five years. However, first-time buyers still face many hurdles to get on the property ladder and can still struggle to raise a deposit and meet tougher lending criteria from the banks.

Planning note

It remains to be seen if similar measures will be introduced for the Land and Buildings Transaction Tax (LBTT) in Scotland or when SDLT is replaced by the Land Transaction Tax (LTT) in Wales from April 2018.

As the Chancellor, Philip Hammond alluded to in his Budget speech there had been much speculation in the press that he would do something to alleviate the Stamp Duty Land Tax (SDLT) burden for first time buyers.

However, he went a step further by introducing a temporary freeze in SDLT. SDLT for all first-time buyers making a purchase of up to £300,000 will pay no stamp duty under the new proposals. He also added a little extra cheer by extending the relief to the first £300,000 of the purchase price on properties valued at up to £500,000. This is an effective reduction of £5,000 in SDLT for a first-time buyer of a house valued at between £300,000 and £500,000.

This measure is intended to help young people buy their first home and to help revive the home-owning dream in Britain after years of decline. The relief was introduced with immediate effect from the 22 November 2017 Budget date. There is no SDLT relief available for first-time buyers spending more than £500,000 on a property.

The measure applies to first-time buyers in England, Wales and Northern Ireland. It remains to be seen if Scotland will introduce similar measures and if the Welsh Assembly will mirror these changes when the new land transaction tax (LTT) which will replace the SDLT is launched on 1 April 2018.

The Chancellor also pledged another £10 billion for the Help to Buy equity loan scheme to help those saving for a deposit to buy a house.