Are you a current homeowner or landlord?
Are you thinking of purchasing a property?
The government is set to make changes to stamp duty on property as of 1st April 2016; see how the stamp duty changes affect you.
Radical reforms to residential property and stamp duty were made in 2014 which reduced the stamp duty payable for the majority of people allowing first time buyers access to the property market. Almost two years later, further changes are to be implemented which will increase stamp duty for those affected by the changes.
So who is affected?
Rental properties are becoming increasingly popular in the UK with mortgage companies offering ‘buy to let’ mortgages to Landlords. The stamp duty increase will affect those who already own a residential property and plan to purchase an additional property. Married couples will only be able to own one property between them, even if it is registered in only one person’s name, before attracting the additional stamp duty. Those with a beneficial interest in a property, such as parents wishing to lend a deposit to their children for a house purchase may also be caught by the new rates.
I plan to purchase an additional property, how will the increase affect me?
The changes are due to come into effect on 1st April 2016. The additional stamp duty payable will be tiered on the same basis that the basic stamp duty is calculated. The additional amount will be payable on top of any stamp duty that is already attracted by the property.
|Purchase price||Additional Rate|
|up to £125,000||3% (except where the property is under £40,000)|
|over £125,000 and up to £250,000||5%|
|over £250,000 and up to £925,000||8%|
|over £925,000 and up to £1.5 millio||13%|
|over £1.5 million||15%|
If you are already in the process of purchasing a property and contracts have been exchanged up until or on 31st March, no additional stamp duty will be payable. If you dispose of your main residential home within three years of the purchase of the additional property, you may be eligible for a refund of the tax paid.
What steps should I take to ensure I pay the correct amount?
If stamp duty is payable on a property, this must be paid within 30 days of completion. If payment is delayed or the amount is incorrect you will attract large penalties. It is important that you advise your solicitor if the property you are purchasing is additional to your residential home or if you are concerned that you are affected by the stamp duty changes.
If you are in the process of purchasing an additional property, your solicitor will be able to advise you on whether the additional amount is payable and if so the amount payable. On completion of the purchase, your solicitor will normally pay the stamp duty on your behalf.
If you are thinking of purchasing an additional property or have made an offer on a property please get in touch with Levi Solicitors experienced Residential Property solicitors in Leeds, Wakefield and Manchester on 0113 244 9931 or get in touch online by clicking here.