SDLT on second homes

Newsletter issue - August 2017.

Stamp Duty Land Tax (SDLT) is payable on the purchase of residential property in increasing portions of the property price above £125,000.

Current rates of SDLT on individual and additional properties are as follows:

  • Purchase price up to £125,000 - SDLT rate Zero; additional property rate 3%
  • The next £125,000 (portion from £125,001 to £250,000) - SDLT rate 2%; additional property rate 5%
  • The next £675,000 (portion from £250,000 to £925,000) - SDLT rate 5%; additional property rate 8%
  • The next £575,000 (portion from £925,000 to £1.5m) - SDLT rate 10%; additional property rate 13%
  • The remaining amount (portion above £1.5m) - SDLT rate 12%; additional property rate 15%

Note that SDLT no longer applies in Scotland, where a Land and Buildings Transaction Tax (LBTT) is charged instead.

Additional property

A higher rate of SDLT will be charged on purchases of additional residential property which completed on or after 1 April 2016.

If contracts were exchanged after 25 November 2015, then the higher rates apply if the purchase was completed on or after 1 April 2016. However, if contracts were exchanged on or before 25 November 2015 but not completed until on or after 1 April 2016, the higher rates will not apply.

The amount of the additional charge will be 3% on top of the normal SDLT charge.

Example

Leo buys a second residential property on 25 July 2017 costing £300,000. This transaction will attract SDLT as follows:

£125,000 x 3% = £3,750

£125,000 x 5% = £6,250

£50,000 x 8% = £4,000

Total SDLT due £14,000

Broadly, the higher rates will not apply if at the end of the day of the transaction an individual owns only one residential property, irrespective of the intended use of the property.

If a main home is sold after a new home is purchased, the higher rate will be payable. However, a refund can be obtained if the old home is sold within three years of buying the new one.

Exceptions

The higher rates are not payable on the purchase of a new property if the chargeable consideration is less than £40,000.

In addition, the charge is not payable where:

  • someone else holds a lease on the property with more than 21 years to run;
  • a lease is purchased that has less than 7 years to run.

The higher rates will not be applicable if an individual's other residential properties meet either of the two criteria above, or each have a value of less than £40,000 when the new property is purchased.

Finally, the higher rates will not apply to purchase of mobile homes, caravans or house boats; or to purpose built student accommodation.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk