Good news stories in the Budget included the disaggregation of stamp duty on bulk house purchasing and potential changes to the UK REIT regime – which are covered in more detail later in the bulletin.

Stamp duty land tax

The bulk purchase rule means that the rate of stamp duty land tax (SDLT) may by election be determined by the average value of each of the dwellings acquired, rather than the total transaction value. This is subject to a minimum rate of 1%.

This means that the stamp duty burden for multiple unit investors will be more aligned to that of individual unit investors on the purchase of residential properties. It is hoped this will encourage more institutional funds into residential property investment. This measure will apply for transactions where the effective date is on or after the date on which the 2011 Finance Bill receives Royal Assent.

Entrepreneurs' relief

The doubling of the entrepreneurs' relief life time allowance to £10m will benefit owners of property development and trading businesses. For individuals that qualify for the full allowance this relief now represents a saving in capital gains tax (CGT) of £1.8m against a benefit of just £80,000 when this relief was first introduced. This applies to disposals from 6 April 2011.

Capital allowances

On a less positive note, the Government proposes to introduce a fixed timeframe within which the purchaser of a building must pool their expenditure on fixtures in order to qualify for capital allowances. Furthermore, it is proposed that the purchaser must agree with the seller the amount of the sale price attributable to the fixtures, which must then be notified to HMRC.

This targets claims which are made several years after the acquisition, when a lack of information in relation to claims made by the previous owner could result in duplication of allowances. However, this will also impact taxpayers who have genuine commercial reasons for deferring a claim; for example if the availability of tax losses means the cost of a contemporaneous analysis of fixtures would not be of immediate value.

Those worst affected if these proposals go ahead will arguably be the purchasers of commercial buildings and the specialist capital allowances advisers who have been successful in assisting them to make substantial 'late' claims on second-hand fixtures. These proposals are subject to consultation at the moment and the relevant legislation is scheduled to be included within the Finance Bill 2012.

Another disappointment has been the removal of a useful concession to the basic rule that, if plant or machinery is partly used for a dwelling house and partly in communal areas, then there must be reasonable apportionment between the two.

The de minimis that was previously included in HMRC's guidance manuals meant that if the amount of expenditure that would not qualify for allowances was 25% or less of the total, then allowances were given on the whole amount. Capital expenditure incurred on or after 22 October 2010 must be analysed for its benefit to both communal and dwelling areas, even when the proportion relating to the dwelling is small.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.