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In his recent Budget speech, George Osborne confirmed that his proposed changes to the Stamp Duty Land Tax will come into effect at the beginning of April as set out in his Autumn Statement. People purchasing a second home or additional property will after this date pay an additional 3% Stamp Duty Land Tax.

There was speculation that there might be exemptions made for individuals or groups with certain circumstances or that the date might be extended, but this has not been the case - apart from one exception.

What Are the Stamp Duty Changes?

If you are purchasing a property that will not be used as your main home, an extra 3% levy will be applied as of the 1st April 2016. This will affect ALL purchasers, including corporate investors who some had suggested might be excluded from the changes.

 

Band                                                      Existing SDLT rates                          New SDLT rates

£0* - £125,000                            0%                                                 3%

£125,001 - £250,000                  2%                                                 5%

£250,001 - £925,000                  5%                                                 8%

£925,000 - £1,500,000             10%                                                13%

£1,500,000 +                             12%                                                15%

 

 *Transactions under £40,000 do not require a tax return to be filed with HMRC and are not subject to the higher rates.

 

Key Points to Take Note of:

 

Married couples and civil partners will be treated as one unit.

For example, a person purchasing a property could be liable for the higher rates if their spouse or civil partner has an existing residential property. 

The new rate will be 3% higher than the existing Stamp Duty Land Tax charge.

The changes will only apply to additional residential purchases completed after 1st April 2016. The higher rate will be applicable if contracts were exchanged after 25 November 2015 and the purchase is completed on or after 1 April 2016. 

Large scale purchases of property (over 15 properties) will be included in the changes and investors backing developments will not be exempt.

 

You can read a detailed explanation of the changes in our previous article: Proposed Stamp Duty Land Tax Changes for April 2016

 

What is the Exception?

An extension of the grace period purchasers are given to claim a tax refund (on higher rates paid when there is an overlap between two properties) has increased to 36 months, from a proposed 18 months.

Please remember, it is important to note that SDLT is a tax and payment of which is the responsibility of the purchaser. 

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