Stamp duty on farmhouses

Do the new higher rates of stamp duty on houses worth more than £1m affect the purchase of a farm which includes a valuable farmhouse?

When the new higher rates were announced, conflicting views were expressed.  In general, property purchase for more than £500,000 attracts stamp duty of 4% payable by the purchaser.  The new rates introduced from 21 March this year limited 5% stamp duty to the purchase of residential property worth between £1m-£2m and imposed a new rate of 7% on a residential property purchased for more than £2m.  If a non-natural purchaser (eg: a company) buys residential property for more than £2m, stamp duty is payable at an eye watering 15% on the purchase.  If a buyer purchases a farm for £5m and the farmhouse accounts for more than £1m of the purchase price, is the higher rate of stamp duty payable on the farmhouse or does the 4% rate apply to the whole of the purchase price?

Providing the purchaser or purchasers are individuals, the higher rates of stamp duty apply only to purely residential properties.  Because a farm counts as a mixture of residential and agricultural property, the 4% rate applies to the whole purchase.  So far, so good.

The problem comes if the farmer farms through a farming company and wishes the farming company to own the farm.  If a company is the purchaser, then it counts as a non-natural person and the 15% higher rate of SDLT applied to non-natural persons would be relevant.  The purchase of the farm by a company would be treated as two separate transactions for SDLT with the acquisition of the farmhouse and garden attracting the 15% rate of SDLT and the farmland and buildings being charged at 4%.

The new higher rates of stamp duty were (we thought) aimed at raising more tax on the purchase of multi-million pound London houses which were being put into company ownership for the purposes of sale and purchase.  No stamp duty saving on the initial purchase by the company, but once the house was owned by the company, a purchaser would buy the shares in the company attracting stamp duty of ½% instead of the higher rates of stamp duty chargeable on residential properties.  As is not unusual, a tax measure aimed at one area of the economy has side effects in other areas which may not have been foreseen.  It only affects farms where the farmhouse is particularly valuable but it is another issue for the buyer of a farm to check.