Thompson Smith and Puxon Residential Property Lawyer, Laura Finnigan, updates us on the recent changes to Stamp Duty Land Tax (SDLT).
In the Spring Budget on 16th March 2016, the Chancellor confirmed that the SDLT changes announced in the Autumn Budget would take effect from 1st April 2016 for purchases of additional residential properties that complete on or after 1st April 2016. Transitional provisions apply to cases where contracts were exchanged on or before 25th November 2015 and completion of the purchase takes place on or after 1st April 2016.
The new provisions were put in place following the Government’s consultation on the details of the policy. The consultation response document has now been published and can be found here.
Of particular note is that an unmarried couple can acquire one property each, or an interest in one property each, without the higher rates of SDLT becoming payable, whereas, if they are married or civil partners and one already owns a property or an interest in a property, then, if the other purchases a property or an interest in a property, the higher rate of SDLT may apply to that purchase. This is because, for the purposes of these new SDLT regulations, all property owned by either party to a marriage or civil partnership is deemed to be jointly owned, unless the parties are living apart from each other in circumstances in which the separation is likely to be permanent.
Another point to note is that where a party purchases a property but does not sell their main residence at the point of completing the new purchase, there is an opportunity to claim a refund from HMRC if the previous home is sold within 3 years of the purchase of the new one (in the consultation document the period suggested within which the previous main residence could be sold and a refund obtained was 18 months).
The higher rates will be 3% above the standard rates of SDLT (but will not apply to purchases of property under £40,000 or purchases of caravans, mobile homes and houseboats).
A calculator is available on the gov.uk website here which calculates the amount of SDLT due on purchases of additional residential properties.
For further advice on Residential Property matters Laura can be contacted on 01206 217020 or by email on firstname.lastname@example.org