After the announcement by George Osborne in last year’s Autumn Statement that he proposed to introduce a 3% Stamp Duty Land Tax charge on the purchase of ‘additional residential’ properties in the UK, the government have issued a consultation document that outlines how the proposals may work.

The main gist of the proposals are that, if at the time of purchasing a UK residential property you have more than one residential property (worldwide), and the property being purchased is not replacing your main residence which has been sold, then the 3% surcharge could apply.

The new proposals appear much more restrictive than originally envisaged and many potential loopholes have been covered:-

* Married couples and civil partners will generally be treated as a single unit when considering how many properties they own and which one is their main residence.   Somewhat, unfairly, unmarried couples can each own their own separate residential property and avoid the charge, even if they are cohabitating.  However, joint purchasers may be caught if one of them owns an additional property.

Other targeted loopholes that could be caught include:-

* A purchase through a company or partnership;

* A purchase for your child, where a parent is a joint owner of the child’s property;

* Ownership through certain types of trust, but not all types, so there could be some scope for planning here.

Where there is a delay in selling your previous private residence and the purchase of new residence so that two properties are still owned at the date of transaction, the additional charges will apply.  There is however, a mechanism for reclaiming the additional SDLT charged where the former residence is sold within eighteen months of the purchase of the new property.

Another trap is that if you own more than one property but sell your main residence and, say, live in rented accommodation, the additional charge could apply if you decide to purchase a new residence more than eighteen months after the disposal of your original residence.

The new charges are set to take affect from 1 April 2016, and the consultation closed on 1 February. Whilst the government have pledged that they will consider all responses, they expect to confirm the final policy by Budget day on 16 March 2016; which makes it unlikely that there will be any significant changes to the proposals.