Specialist Property Lawyers
Stamp Duty Land Tax (SDLT) changes from 1 April 2016

1. Higher rate on second homes

On the 16th March 2016 a higher rate of Stamp Duty Land Tax (SDLT) was introduced on most purchases of additional residential properties in England, Wales and Northern Ireland where, at the end of the day of the transaction, individual purchasers own two or more residential properties and are not replacing their main residence.

SPL Flow Chart

The vast majority of transactions, such as first time buyers purchasing their first property or home owners moving from one main residence to another will be unaffected.

Property owned globally will be relevant in determining whether a property purchased in England, Wales or Northern Ireland is an additional property. This means that if someone is purchasing their first or only property in England, Wales or Northern Ireland, they may pay the higher rates if they own property outside these areas.

The higher rate will be 3 percent above the current SDLT rate (see chart below).

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.

The most common scenario where the higher rate will be charged is where there is a purchase of a buy to let or second home in addition to a main residence. An exception to this will be where the property being purchased is replacing the individual’s main residence. Where the sale of a main residence has not completed at the time of the purchase then the higher rate will apply although a refund of the additional SDLT can be claimed as long as the main residence is sold within 36 months.

Download Our SDLT Excel Calculator

What you need to do

To assist you with understanding and then confirming to us whether the higher rate may apply to your transaction we have included the flow chart below and we would also urge you to visit the GOV.UK website at:

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

Please note that we will act on information supplied by you and will submit the tax return on completion on your behalf acting as your agent. Our role as your agent is limited to helping you complete the form, submitting the form on your behalf and submitting the tax due (subject to receipt of the necessary funds to make the payment).

The proposed SDLT changes are complex and it is not possible to explain all possible scenarios here. If you have any doubt at all about whether or not the proposed changes will affect you, or you do not fully understand the above, or have any reason to believe the proposed changes will or may affect your transaction and a higher rate of SDLT will be payable please let us know as soon as possible.

2. SDLT relief for First Time Buyers

From 22 November 2017, the Chancellor of the Exchequer announced a relief from stamp duty land tax (SDLT) for first time buyers. The relief will apply to purchases of residential property for £500,000 or less, provided the purchaser intends to occupy the property as their only or main residence.

First time buyers purchasing their first home for £300,000 or less will pay no SDLT. Where the purchase price is over £300,000 but does not exceed £500,000 they will pay 5% on the amount above £300,000.

A calculator is available on HMRC’s website which calculates the SDLT due for first time buyers who are eligible to claim the relief: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax.

Conditions:


• Purchase of a single dwelling
Relief is only available in respect of the purchase of a major interest in a single dwelling. A purchase of more than one dwelling in a single transaction will not give rise to relief.

• Relevant consideration is not more than £500,000
Relief is only available where the relevant consideration for the transaction is not more than £500,000.

• The purchaser or purchasers are first time buyers intending to occupy the dwelling as a main residence
Only purchasers who are individuals are entitled to claim relief. If there is a purchaser who is a company then no relief is available. All the purchasers must be first time buyers. If there are any purchasers who are not first time buyers then no relief is available. All the purchasers must intend to occupy the dwelling as their only or main residence.