Proposed Stamp Duty (SDLT) rates in England, Wales and Northern Ireland will be 3 percentage points above the current SDLT residential rates on or after April 2016. (subject to change by the government)
The change, which aims to free up housing for buyers will add thousands to buy-to-let property transactions.
Here we outline the major changes to look out for.
Who will be affected?
– Second home or buy – to – let purchasers will have to pay an extra 3% duty
– If you buy a home before you sell your old one you will be liable to pay the additional levy
– However the 3% will be refunded if you sell your former property within 18 months
– Scotland is introducing a 3% levy in addition to the Land and Buildings Transaction Tax ( LBTT ) which came into force last year.
Will you pay more? Answer the questions in the below flow diagram to find out (Source: GOV.UK)
Buy – To – Let – Investors hit in two further ways
– Tax relief claimed for mortgage payments on buy-to-lets will be capped at 20% BY 2020.
– From April, investors will no longer be able to claim a 10% ‘wear and tear’ allowance.
– They will only be allowed to claim actual expenditure against tax.
– Different rules apply to furnished holiday lets – Landlords can claim the full cost of items against tax in the year in which they make a purchase.
– From April 2019 vendors of second homes and BTL’s will have to pay tax on any capital gain they have made within 30 days of selling the property.
Stamp Duty Rate Table
England and Wales
Up to £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5m 10%
£1.5m + 12%
Scotland ( LBTT)
Up to £145,000 0%
£145,001 – £250,000 2%
£250,001 – £325,000 5%
£325,001 – £750,000 10%
£750,001 + 12%
Inheritance Tax Update
– From April 2017 individuals who leave property to their children / grandchildren / direct descendants will be granted a £175,000 family home allowance in addition to the existing £325,000 inheritance tax threshold.
– Couples will be able to leave a £1million home to their descendants free of tax.
For more information on any of the above please contact us and we will be able to put you in touch with one of our highly knowledgeable financial advisors .