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Autumn Statement: Stamp Duty Land Tax Update

Written by our recommended Tax specialist Nigel Reynolds from Reynoldsandco.

At present we only have the Chancellor’s speech, the Blue Book and Treasury statements to work from and they are very sketchy.  What we know is that the increase in Stamp Duty Land Tax will apply to Buy to Let and Second Homes and it is effective from 6 April 2016.  We will need to wait for the final legislation to be certain but I would expect that it will apply to all purchases where the contracts are exchanged or completion takes place after 6 April 2016, there will also undoubtedly be some anti-avoidance provisions as well.  We also know that it applies to all properties costing over £40,000.  So the rates will be:

0 – £40,000 – Nil
40,001 – 125,000 – 3%
125,001 – 250,000 – 5%
250,001 – 925,000 – 8%
925,001 – 1,500,000 – 13%
1,500,001 and above – 15%

At present we don’t know whether this only applies to individuals or whether it will also apply to properties purchased by Companies.  My guess is that it will be both in which case for companies the 8% rate will apply to properties costing £250,001 to £500,000 and all properties purchased through a company costing more than £500,000 will pay 18% SDLT.

As an indication of the additional cost of this tax if an individual purchases a £150,000 property after 6 April 2016 then they will pay £3,800 in SDLT compared to £750 now.  The Daily Mail have published some calculations but they have got them wrong as they have not allowed for the £40,000 nil rate band.

If you are able to purchase property before the change then you will save on the SDLT but I would guess that a lot of people will be trying to do the same thing which will drive prices up.  Once the new SDLT comes into force then I would expect prices to come down due to both fewer people buying for Buy to Let and also those people who are buying will be offering less money to cover the additional SDLT.

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