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STAMP DUTY HIKE ON ADDITIONAL PROPERTIES
15 Jan 2016
From 1 April 2016, if you purchase a property in England, Wales or Northern Ireland at a purchase price of over £40,000 and, at the end of the day of the purchase transaction you own, either alone or with someone else, two or more residential properties and, are not replacing your main residence, your purchase will be subject to higher stamp duty rates.
The higher rates will also generally apply to purchases of residential property by companies.
The higher rates will be 3 percentage points above the current SDLT residential rates. They will be charged on the portion of the value of the property that falls into each band.
Band Existing residential SDLT rates New additional property SDLT
Rates
£0* - £125k 0% 3%
£125k - £250k 2% 5%
£250k - £925k 5% 8%
£925k - £1.5m 10% 13%
£925k - £1.5m 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.
Example 1
An additional residential property is purchased for £100,000. SDLT is calculated as follows:
3% on £100,000 = £3,000.
Example 2
An additional residential property is purchased for £200,000. SDLT is calculated as follows:
3% on the first £125,000 = £3,750
5% on the remaining £75,000 (the portion between £125,000 and £200,000) = £3,750
The total SDLT due is therefore: £3,750 + £3,750 = £7,500
If a new main residence has been purchased but the previous main residence has not been sold, the higher rates will apply. If however, within 18 months of purchasing the new main residence the old main residence is sold, a refund on the higher rates paid will be available.
Consultations are still taking place regarding these changes and confirmation of the final design will be announced at the Budget on 16 March 2016.