The government’s plan to reduce the number of properties bought by businesses has been successful, according to the latest figures.
The plan, introduced by George Osborne, was designed to discourage property owners from buying residential buildings under a corporate wrapper in order to avoid paying a higher level of Stamp Duty. In 2013, the government introduced a higher tax on properties built this way, including a 15 percent Stamp Duty payment and an Annual Tax on Enveloped Dwellings.
Recently published Government statistics show the policy has largely been a success, with just 5,720 properties over £1 million liable to the charge, representing only 0.03 percent of all privately owned property in England and Wales.
According to data analysis by London Central Portfolio (LCP), above a value of £2 million where a like-for-like comparison can be made, only 3,460 properties are now held in corporate wrappers – representing a 14 percent fall from 2013.
The government have also generated significant returns from the tax, collecting a £178 million windfall in the 2015-16 tax year, a 53 percent increase on the previous financial year.
Naomi Heaton, CEO of LCP, commented:
“Meeting the Government objective to deter SDLT savings through company transfers, the ATED has encouraged owners to drop property out of corporate structures and hold properties in their own names. This has had the additional benefit of increased transparency.
“The Government has made considerable progress of achieving its objectives of de-enveloping, whilst benefiting from an unanticipated tax windfall along the way.”