stamp duty

Stamp Duty has changed signficantly in the last 6 months.  Therefore we thought it would be useful to summarise the latest stamp duty position, as a useful guide for our subscribers. Anyone who buys additional residential property, including second homes and buy-to-lets, has had to pay an extra 3 percentage points in stamp duty from April 1, 2016.

 

  • The additional charge applies above the current “stamp duty land tax” rates. This means there will be 3pc tax to pay on homes worth up to £125,000, 5pc tax (instead of 2pc) on homes that cost between £125,001 and £250,000, and 8pc on homes worth between £250,001 and £925,000.

 

  • Homes worth up to £1.5m are subject to 13pc stamp duty and those over this amount will incur a 15pc charge.

 

  • In practice this means that someone buying a £450,000 house will have to pay an extra £13,500 of tax.

 

  • Anyone buying a second home has 36 months to sell their original property. They can then get a refund on the extra tax.

 

  • In addition, anyone who sold their home before November 2015 but does not currently own their own home has until November 2018 to buy a new one without paying the extra tax.

 

Buy-to-let and second home Stamp Duty tax bands
BracketsStandard rateBuy-to-let/second home rate (April 2016)
Up to £125,0000%3%
£125,001 – £250,0002%5%
£250,001 – £925,0005%8%
£925,001 – £1.5m10%13%
over £1.5m12%15%
Source: HMRC  


Interestingly though, The Telegraph have just reported that annual stamp duty receipts are expected to show a drop from next week after a slump in the number of property transactions.

The Government will release its receipts for the 12 months to the end of March, which will reveal the full effects of changes to stamp duty made by George Osborne in December 2014, when the levy was raised on properties worth more than £1.1m.

It will register the initial impact of the 3pc tax hike in April for buy-to-let investors and second-home buyers. 

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