Mr Magnet buys run-down residential properties which are either substantially renovated and sold or demolished and replaced by one or more new dwellings for onward sale. Can Mr Magnet avoid the higher rate SDLT charge by using a separate company for each individual property purchase?
Guidance on the higher rate of SDLT is to be found in the HMRC Guidance Note “Stamp duty land tax: Higher rates for purchases of additional residential properties” which deals with acquisitions by both individuals and limited companies.
The title is somewhat misleading and has caused some confusion. As a general rule, the additional 3% rate applies to purchases of additional residential properties by an individual. In the case of companies, and despite the title of the Guidance Note, a residential property does not have to be an additional property for the additional 3% rate to apply. There is an exception for properties already attracting the top 15% rate.