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Changes to Stamp Duty Land Tax for Second Homes and Investment Properties

Higher rates of Stamp Duty Land Tax (SDLT) will apply to the purchase of second homes and investment properties from 1 April 2016.

As part of last year’s Autumn Budget, the government announced a higher rate of SDLT that will apply to purchases of additional residential properties. The new rates target individuals buying second homes and buy-to-let landlords. The amount of SDLT payable in these circumstances will be significantly higher once the changes come into force.

The current rates will increase as follows:

£40k – £125k: From 0% to 3%
£125k – £250k: From 2% to 5%
£250k – £925k: From 5% to 8%
£925k – £1.5m: From 10% to 13%
£1.5m and over: From 12% to 15%

The higher rates will not affect purchases where the purchase price is up to £40,000 where SDLT is not currently required.

The new rates will apply to all completions that take place on or after 1 April 2016 however contracts entered into on or before 25 November 2015 (the date the increase was announced) will not be subject to the new rates, subject to normal rules on contractual variation or assignment.

The increased rates are not expected to apply to companies or investment funds that make significant investments in residential property. This exemption is likely to apply for ownership of a property portfolio of more than 15 residential properties.

For help with how this affects your position please contact Sharon Pannu on 0843 224 7949 or email sharon.pannu@squareonelaw.com 

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