Thompson Smith and Puxon (TSP) Property Lawyer, Laura Finnigan, explains the changes to Stamp Duty Land Tax (“stamp duty”) that Chancellor George Osborne announced in his Autumn Statement.
As from 1st April 2016, buy-to-let and second home purchases falling within any stamp duty band above a £40,000.00 starting level will be subject to an additional 3% stamp duty charge.
In his Autumn Statement the Chancellor is quoted to have said “Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of stamp duty that will be three per cent higher on the purchase of additional properties like buy-to-lets and second homes”.
It is said that the tax receipts raised by this move will assist towards doubling the affordable housing budget and will help first time buyers.
What does this mean in monetary terms? For those buying buy-to-let property or a second home for more than £40,000, stamp duty will be 3% on the first £125,000 of the purchase price, 5% on any additional amount up to £250,000, and then 8% on any further amount up to £925,000. (The standard band rates above that are similarly subject to an additional 3%.) So, for example, the purchase of a second home at a price of £275,000 will mean a stamp duty land tax bill of £12,000 (compared to £3,750 as at today’s date).
It will be interesting to see how these increases affect the property market as the new higher levels of stamp duty take effect next April. It must be reasonable to assume that the first quarter of 2016 will see an increase in buy-to-let and second home purchase transactions in order to beat the 1st April 2016 increase date.
To find out more about how Laura can help with your residential property transaction contact her on 01206 217020 or by email on firstname.lastname@example.org