When does higher rate Stamp Duty (SDLT) apply?
If you (or anyone else you are buying with) are buying a second home or a buy to let residence after 31st March 2016 there will be an extra 5% Stamp Duty charge (unless you are replacing your main residence).
If you (or the person you are buying with or your or their spouse/civil partner) own more than one residential property (or a share in one) on the day you complete the purchase the higher rates will apply. These higher rates apply to company purchasers whether or not the company owns other residential property.
You will have 36 months to sell your main residence after you buy another main residence (see the link to the claim form below) to enable you to reclaim the extra 3% tax. Once you have completed your sale you then have a further 12 months only to make the tax reclaim. If you dispose of your main residence, you have 36 months to buy a new main residence before the higher rates apply (assuming you still own additional property that would trigger the higher rates liability).
If any of the buyers is a non-UK resident there is an extra charge of 2%. If a non-UK resident becomes a UK resident during the year after completion this extra charge can in some circumstances be reclaimed.
Here are the new rates (different rules apply to purchases over £500,000 by companies etc). The rates are applied to the price paid within each property value band:
| Property Value Band | Basic SDLT rate | SDLT rate on additional residential properties |
Additional 2% SDLT rate for non UK residents (where the rate for additional residential properties also applies) |
|---|---|---|---|
|
£0 – £125,000
|
0% |
5% (except for properties costing less than £40,000 on which the rate is 0%. If £40,000 or more the whole price is chargeable) |
7% |
|
£125,001 – £250,000
|
2% |
7% |
9% |
|
£250,001 – £925,000 |
5% |
10% |
12% |
|
£925,001 – £1.5 million |
10% |
15% |
17% |
|
Over £1.5 million |
12% |
17% |
19% |
See the flow chart to find out if the extra charge applies.
Purchases that include non-residential property (for example a field) are subject to different rates and you should report such a transaction to us immediately.
There are complex rules that apply to SDLT and exeptions that may apply to you. If in doubt ask us for advice.
The link to the claim form to recover the extra tax when you later sell your main residence is
https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties
Click the chart to zoom in.
Exceptions to the higher rate rules
In the 2017 autumn budget it was announced that the higher rates of SDLT would not apply in certain circumstances that had unintentionally been caught by the 2016 Regulations. Those circumstances are as follows:
- Certain people who buy a residential property following a divorce or dissolution of a civil partnership. This exemption can apply where the purchaser retains an interest in another residential property that is their former partner’s main residence and which is subject to a “property adjustment order”.
- People who buy an additional interest in their main residence, or extend their lease, when they own other residential property.
- Spouses transferring property between each other.
- Trustees who buy residential property for children whose affairs are subject to certain court appointments. This can apply, for example, where a parent buys a residential property on behalf of a child who has lost mental capacity and the parent has been appointed to act as deputy for the child by the Court of Protection.
This is a basic guide only. If you think that any of these circumstances apply to your transaction, please contact our experienced conveyancing team’
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