Reform of Stamp Duty Land Tax (“SDLT”) Print

In the Autumn Statement of 3 December 2014 the rates of SDLT on residential property have been revised with immediate effect so that instead of charging a single rate based on the price payable for the property, the SDLT is now charged at each rate on the portion of the purchase price which falls within each rate band.
The new rates and thresholds applying from 4 December 2014 are:

Property Value Band Rate Tax on Band,£ Tax to top of Band,£
Up to £125,000 0% 0 0
£125,001 to £250,000 2% 2,500 2,500
£250,001 to £925,000 5% 33,750 36,250
£925,001 to £1,500,000 10% 57,500 93,750
Over £1,500,000 12%

Transitional relief is available to purchasers who have exchanged contracts but not completed the purchase by 3 December 2014. These purchasers will have a choice of either paying under the old SDLT flat rate structure, or paying under the new regime. Where the purchase price is £937,500 or less the purchaser will be better off to opt to pay under the new regime. Where the purchase price is more than £937,500 the old rates of SDLT will produce the lower tax charge.

In the November 2015 Autumn Statement the chancellor announced that from 1 April 2016 a higher rate of SDLT, three per cent above the current rates will be charged on the purchase of additional residential properties costing more than £40,000, including buy to let properties, and second homes.

The higher rates will not apply to the purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property. The government will consult on policy detail, but has stated that it will provide £60m for communities in England where the impact of second homes is particularly acute.

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