General (main property discussion here) - Budget 2005...any thoughts??

Simon

OK...now it works...dont what happened there...

I suppose the stamp duty being raised to £120000 is a start for some any thoughts?

Good budget for the not so well off i suppose, apart from fags going up that is.

ASlex M

I'm glad fags have gone up....sorry Alex! Anyway fags are dirt cheap here in Germany....every fu##a smokes...it gets on your t#ts!!!

But with the income tax at around 43% it drives anyone to smoke!

I got sent this - it's a press release so I guess it's not illegal to reproduce!?

PRESS RELEASE

THE 2005 BUDGET FOR THE UK PROPERTY SECTOR

Gordon Brown in his budget today made several announcements of significant importance to the UK Property Sector.

These cover the proposed introduction of a UK REIT, hopefully from April 2006,

Substantial changes to Stamp Duty Land tax with the abolition from midnight tonight of the Disadvantaged Area relief for all Commercial Property Transactions. Anyone in the process of acquiring such a property should seek to exchange contracts before the end of today!

Changed to the SDLT to close various SDLT schemes which had been created to avoid paying SDLT

Introducing a notification process so that Accountants and Solicitors creating SDLT avoidance schemes must notify the Inland Revenue which obviously allows such schemes to be blocked by legislation.

Finally the good news!

Introduction of 100% Capital Allowances for the renovation of business property in disadvantaged areas which has been empty for more than 12 months.

The threshold for Stamp duty land tax on residential purchases has been increased from £60,000 to £120,000 from today.

Introduction of a Shared Equity Scheme to offer financial support to assist up to 100,000 to acquire residential property and a plan to develop more homes on existing council estates.

Further details on each of the above can be found below:

UK REAL ESTATE INVESTMENT TRUSTS: A DISCUSSION PAPER

Alongside Budget 2004, the Government launched a consultation to consider the introduction of Real Estate Investment Trusts (REITs) with the aim of promoting greater efficiency in the property investment market, supporting the Government's wider objective of raising UK productivity. The Government is today publishing 'UK Real Estate Investment Trusts: a discussion paper', along with a summary of responses to the Budget 2004 consultation.

The Government is committed in principle to reforming the taxation of property investment. The consultation has enabled the Government to better define the key features of a potential UK-REIT model that allows for market flexibility. The paper also raises some challenging issues in designing the tax treatment for a model that meets both the needs of the UK property investment market and the Government's objectives for a UK-REIT. The Government will therefore engage in further dialogue with industry representatives. Subject to finding a workable solution that meets the stated objectives, including reform at no overall cost to the Exchequer, the Government aims to legislate for a UK-REIT in Finance Bill 2006.

The discussion paper is available from the Treasury website at:

http://www.hm-treasury.gov.uk/budget/budget_05/other_documents/bud_bud05_odreits.cfm

CAPITAL ALLOWANCES: RENOVATION OF BUSINESS PREMISES IN DISADVANTAGED AREAS

Who is likely to be affected?

1. Any individual or company, who incurs capital expenditure on bringing qualifying business premises (owned or let) back into business use.

General description of the measure

2. The scheme will enable people or companies, who own or lease property that has been vacant for a year or more in one of the designated disadvantaged areas of the UK, to claim immediate, full tax relief on their capital spending on the conversion or renovation of the property, in order to bring it back into business use.

Operative date

3. The scheme will apply once state aid approval has been granted.

STAMP DUTY LAND TAX: COMMERCIAL DISADVANTAGED AREAS RELIEF

Who is likely to be affected?

1. Purchasers entering into a commercial land transaction in Enterprise Areas, which are wards designated as qualifying for the 'disadvantaged area relief' exemption from stamp duty land tax. Land transactions include the transfer of freehold and the grant, assignment or assignation of a lease.

General description of the measure

2. Disadvantaged areas relief will not be available for non-residential land transactions with an effective date after today.

Operative date

3. The operative date is for transactions with an effective date after 16 March 2005. However the relief is preserved for the completion or substantial performance of contracts entered into on or before 16 March 2005, provided that there is no variation or assignment of the contract or sub-sale of the property and that the transaction is not the exercise of an option or right of pre-emption.

STAMP DUTY LAND TAX: ANTI-AVOIDANCE AND OTHER PROVISIONS

Who is likely to be affected?

1. Property vendors and purchasers who use avoidance schemes to avoid stamp duty land tax.

General description of the measure

2. This measure blocks a number of stamp duty land tax avoidance schemes. These schemes cover:

Use of group relief

Use of acquisition relief

Grants of leases by bare trustees to their principal

Certain variations of leases to remove restrictive covenants

Use of repayable loans or deposits as consideration

Reduction of market value by encumbrance

Use of 'sub-sale relief' in alternative finance transactions and

Use of partnerships.

STAMP DUTY LAND TAX AND COMMERCIAL PROPERTY

Who is likely to be affected?

1. Accountants and lawyers who devise and market certain tax schemes and arrangements and clients who use them. Property companies and others who devise their own schemes in-house.

General description of the measure

2. These additional disclosure rules are designed to provide the Inland Revenue with information about schemes and arrangements intended to avoid Stamp Duty Land Tax (SDLT) on commercial property transactions in the UK. The information will enable risk assessment and, where appropriate, counteraction.

Operative date

3. Schemes and arrangements made available or implemented on or after 1 July 2005.

STAMP DUTY LAND TAX: RAISING THE THRESHOLD FOR RESIDENTIAL TRANSACTIONS

Who is likely to be affected?

1. Anyone who enters into a land transaction relating to residential property where the chargeable consideration exceeds £60,000 but does not exceed £120,000.

General description of the measure

2. The measure raises the threshold for Stamp Duty Land Tax on residential transactions from £60,000 to £120,000.

Operative date

3. Any land transaction the 'effective date' of which (see below) is on or after 17 March 2005.

Current law and proposed revisions

4. Stamp Duty Land Tax is charged, at varying rates, on the consideration given for a land transaction. At present no tax is payable on transactions in residential property if the consideration does not exceed £60,000 and tax is payable at 1% if the consideration exceeds £60,000 but does not exceed £250,000.

5. This measure raises the threshold to £120,000. So tax will not be payable on transactions in residential property if the consideration does not exceed £120,000 and tax will be payable at 1% if the consideration exceeds £120,000 but does not exceed £250,000.

6. There is no change to the charge on residential transactions where the consideration exceeds £120,000. There is no change to the higher threshold of £150,000 for residential transactions in designated disadvantaged areas

SHARED EQUITY SCHEME AND NEW PROPERTY DEVELOPMENT ON COUNCIL ESTATES

A proposed new partnership with the Council for Mortgage Lenders - together typically financing 25 per cent of the purchase price - a shared equity scheme that will raise the numbers eligible for low cost homeownership schemes to 100,000 new homebuyers.

A porposed development of new residential housing, initially starting with nine pilots across the country we will build new private homes in council estates. Where once all were tenants we will offer new opportunities to own your own home

For further information contact

Martin Muirhead

Kingston Smith

Devonshire House Tel 020 7566 3705

60 Devonshire House Fax 020 7689 6305

London mam@kingstonsmith.co.uk

EC1M 7AD

for resi investors the increase of no stamp duty up to £120k was a nice bonus.

for commercial property investors the abolition of stamp duty exempt areas was a shock and a half.

oh well - cant please everyone!

tom