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  • Tax

    Landlord Guide to Stamp Duty Surcharge



    From 1 April 2016, anyone who buys additional property, including buy-to-lets, holiday lets, and second homes, will have to pay an extra 3% of the purchase price in stamp duty.

    Only residential purchases in a personal name or limited company structure are liable. The new surcharge does not apply to land, commercial or semi commercial units

    The additional charge applies above the current “stamp duty land tax” rates. The below table illustrates how the changes will affect you:



    Source of image: Zoopla

    The higher rates of SDLT are part of the government’s commitment to supporting home ownership.

    The higher rates will apply to 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.

    The higher rates will also generally apply to purchases of residential property by companies unless a company buys 15 units or more in one transaction.*  (*Still under consultation).

    You can check using the below flow chart as to whether your property purchase will be affected by the higher rates of stamp duty:



    This clearly affects the buy-to-let market but there are additional implications landlords should be aware of:

    > 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, and they already own a property outside these areas, they may have to pay the higher stamp duty rate. This would apply to a foreign homeowner buying in Britain, a Briton with a holiday home, or someone who owns a Scottish property.

    > Married couples and civil partners who own one property at the end of the day of a transaction will not pay the higher rates of SDLT. However, if either of them owns more than one residential property they may pay the higher rates when purchasing another property.

    The government will treat married couples and civil partners living together as one unit.

    >The government proposes that properties bought as furnished holiday lets should be treated in the same way as all other residential properties – if the property is purchased as an additional property the higher rates will apply.

    >Currently, all transactions under £40,000 do not require an SDLT return to be filed with HMRC where no tax is due. This provides simplicity and minimises taxpayer burden. This will remain the case for purchases of additional residential property.

    Residential properties, including a tenancy or lease of a residential property, worth less than £40,000 will not be taken into account when determining if an additional residential property is being purchased.

    Find the full Government guide >>> here.

    Related topic:

    What affect do you think stamp duty hikes will have on the property market?

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    Stamp Duty Sums   -> A good calculator online to find the difference

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    Hi,


    Apparently there are talks that the SDLT increase might be cacelled or at least postponed, have you heard anything about this ?


    I'm very curious as I've exchanged on a few properties with long completions.

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    ​I have heard this from one person; it would be very welcome, although I can't see it happening.


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    It is worth pointing out in addition that the date of the Autumn Statement is important (25th November 2015), in that the government documents suggest that if you exchanged prior to 25th November 2015, but do not complete until after 1st April 2016, then you would not be exposed to the higher rates.  If however, you exchanged after 25th November 2015, and complete after 1st April, then the higher rates would apply.

    In any case, more details of the stamp duty changes are due at the next Budget, which will be released on Wednesday 16 March 2016.  

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    RITA4Rent (Rental Income Tax Advisors)

    Specialists in Landlord Taxation

    Recommended tax advisors of the Residential Landlords Association

    Follow us on Twitter @Rita4Rent

    clients (at) rita4rent (dot) co (dot) uk

    http://www.rita4rent.co.uk

    Good news from Scotland!!!!

    Not good news for all but helpful for those in Scotland wishing to move their property into a ltd company...... Hopefully the UK government will follow suit and help landlords survive the changes.

    https://www.scottishconstructionnow.com/1...arliament/

    In brief

    Transactions of six or more properties were made exempt from the charge last month following evidence provided to Holyrood’s finance committee from the Scottish Property Federation (SPF).

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    Breaking news:

    Osborne has just gone before the Treasury Select Committee to explain himself on additional Stamp Duty Charge.

    View video


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    The Government will not hit purchasers of properties with granny flats or other annexes with the 3% Stamp Duty surcharge.

    Treasury minister David Gauke told MPs: “I have been made aware that the Bill as drafted might lead to some main houses with an annexe for older relatives attracting the higher rates of Stamp Duty Land Tax intended to apply to additional properties.

    “I am happy to reassure the House that it is not our intention and the Government will table an amendment in committee to correct the error and ensure fair treatment for annexes.”

    The amendment is likely to exempt most annexes, including staff quarters, as long as the annexe is in the same grounds and is worth no more than one-third of the total.

    Full/source story

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    Hi sorry I'm confused. I have 3 properties 1 residential and 2 buy to let's. In the near future I want to sell my residential and buy a new residential will in incur a 3% sdlt for my residential. Thanks Jordan

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    Yes, because at the end of the day, you will own more than one property.  It doesn't matter whether it is resi or BTL, if you own more than one property and buy another the 3% SDLT applies.  Sorry!

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