Autumn Statement and Stamp Duty Land Tax (SDLT)
On 25th November 2015 the Chancellor, George Osbourne, announced as part of his Autumn Statement that higher rates of Stamp Duty Land Tax (SDLT) would be charged on purchases of residential property that are in addition to your main home, such as second homes or buy to let investment properties.
Purchasers will be required to make a declaration to this effect when they are purchasing a property that will not be their main home
The new SDLT rates for these types of property are 3% higher than the current SDLT rates and the new rates for each band are set out below:
|Band||New SDLT Rates for Additional Residential Property|
|£0 - £40,000.00*||0%|
|£125,001.00 - £250,000.00||5%|
|£250,001.00 - £925,000.00||8%|
|£925,001 - £1.5M||13%|
* SDLT is payable only on purchases over £40,000.00
The new additional SDLT rates will become effective for all transactions that complete on or after 1st April 2016, although there will be some exemptions such as contracts entered into on or before 25th November 2015 will not be subject to the new rates (subject to the usual rules relating to variations and assignment) or transactions involving the purchase of caravans, mobile homes and house boats.
It is anticipated that there is likely to be a rush to complete purchases of second homes and buy to let investments before the 1st April 2016, although the long term effect of these changes remains to be seen.
However, it is likely that reforms are on their way with the government planning to enter into a further consultation in 2016 with proposal to reduce the time limits for submitting SDLT returns and making payment following completion of a transaction.