Stamp Duty Land Tax (SDLT) Changes on Second Homes
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Date Published:08 Mar 2016 Last Updated:16 Apr 2021

Stamp Duty Land Tax (SDLT) Changes on Second Homes

Conveyancing - Residential Property

Following the changes to the Stamp Duty Land Tax “SDLT” introduced in December 2014, the Chancellor’s Autumn Statement issued on 25th November 2015 has announced further changes to the SDLT scheme applying higher rates of SDLT for purchases of additional properties which include second homes and buy to let properties.

Obviously this will have a significant impact on an investment buyer looking to purchase additional properties to generate a buy to let income or those looking to purchase properties for refurbishment and resale over and above their existing home.

The proposed changes include an addition 3% will be added to the existing SDLT rates. Currently, SDLT is payable on each part of the purchase price which falls within a fixed band. The new rates set to come in on 1st April 2016 will be applied to purchases of additional residential properties where the consideration exceeds £40,000.00. However the new rates on not intended to apply to any contracts which have been entered into on or before 26th November 2015.

The table bellows gives an example of the existing SDLT rates and the new proposed rates under the scheme:-

Purchase Price Existing SDLT rate Proposed SDLT rate
£125,000.00 £0.00 £3,750.00
£250,000.00 £2,500.00 £10,000.00
£375,000.00 £8,750.00 £20,000.00
£500,000.00 £15,000.00 £30,000.00

Therefore, from a client’s perspective it is important to consider how the additional charges may impact on your budgeting and ability to proceed with the proposed purchase as any property purchases completing after the 1st April 2016 will attract the higher rate of duty and could result in considerable additional funds owing at completion of the matter which were not originally budgeted for.

However, there are circumstances in which the higher rate of duty can be refunded on the basis that you acquire your second property prior to completion of your main residence, provided the sale of your main residence completes within 18 months of the first purchase, a refund can be obtained from HMRC.

To assist you with understanding and then confirming to us whether the higher rate may apply to your transaction we have included the flow chart below and we would also urge you to visit the GOV.UK website.

For further information and advice, please contact Sarah Harris or a member of the Residential Conveyancing Team on 01202 525333.