26th February 2016
Stamp Duty Land Tax
Stamp Duty Land Tax on Second Homes - Not Just an April Fools Joke
Stamp Duty Land Tax on Second Homes – Not Just an April Fools Joke
Question: If I complete the purchase of a buy to let property after 1st April 2016 will I have to pay more Stamp Duty?
Answer: Yes, it is very likely that you will, there are many hoaxes on April the 1st but, unfortunately, Stamp Duty Land Tax (SDLT) on second homes is likely not to be one of them.
The proposed introduction of higher rates of SDLT on purchases of additional residential properties is part of the Government’s five point plan for Housing and is one of the ways in which they are planning to raise funds to support housing supply and low cost home ownership.
The higher rates will be 3% above the current SDLT rates and are planned to take effect from 1st of April 2016 following a period of consultation which is due to end on the 1st of February with confirmation of the final design being announced at the budget on the 16th of March.
The planned increase in SDLT for second homes will affect all transactions completing after the 1st of April. For example, a second property purchased for between £125,000 to £250,000 will be taxable at 3% for the first £125,000 and then 5% for the remaining £125,000 (making a total of £10,000 payable in Stamp Duty). A second property purchased for between £0 to £125,000 will be taxable at 3% rather than 0%.
There is a detailed set of circumstances set out on the GOV.UK website but, basically, if at the end of the transaction you own two properties, one of which will be your main residence with the other being a buy to let, the higher rates of tax will apply.