Another topic that needs to be addressed when making a property purchase in London or England is the applicability of stamp duty when making a multiple property purchase.

Having analysed stamp duty and its tax brackets in previous articles, we must remember that it is a progressive tax. A progressive tax by tax brackets means that each taxable class is divided into several brackets, each of which corresponds to an increasing rate as the brackets increase.

The principle of progressivity of taxes in the U.K., as in other countries of the world, is linked and applied to the principle of increasing utility of wealth. In order not to dwell on the economic genesis of the tax itself, which could be tedious, we would like instead to illustrate the tax treatment when an SPV or individual buys more than one house or property in London or the UK.

-Applicability :

In this case the investor has the possibility to apply for a favourable Stamp Duty; there are two cases of applicability and under certain conditions. The conditions of applicability in both cases are that the real estate transaction takes place between two parties, i.e. a selling party and a buying party, and that the object of the transaction is the purchase of real estate to be rented out or to be restructured in order to be put back on the market. Having established the basic conditions, let us look at the two cases of applicability of the benefits:

-Cases:

1. a) A buyer decides to buy two or more real estate units, but no more than five. Let us assume for example, for ease of calculation, that four property units are purchased at a total price of £1,500,000.00; if the relief did not apply, the purchaser would pay a Stamp Duty of £138,750.00. If the purchaser opts for the relief, the tax payable will be £80,000.00. The amount of the Stamp Duty relief is derived from the calculation set out below :

-the total value of the transaction divided by n 4 units is £375,000.00 per unit;

-the tax is calculated on a single amount of £375,000.00 which is equal to £20,000.00;

-the amount of Stamp Duty per single unit is multiplied by the number of units purchased, in this case four; therefore £20,000.00 * 4 units = £80,000.00.

It is only a matter of applying the tax not on the total amount of the transaction, but on the amount of the single transaction per unit, and because of the progressivity of the tax it allows an optimisation of £58,750.00.

1. b) A buyer decides to purchase six or more property units. Let us assume, for example, that a purchaser decides to purchase 6 real estate units for an amount of £2,250,000.00, i.e. £375,000.00 per single unit. In this case Stamp Duty can be applied in respect of transactions involving commercial real estate. Therefore the applicability is according to the following brackets :

0%–up to £150,000.00

2%–from £150,000.00 to £250,000.00

5%–from £250,000.00 to infinity.