George Osborne and his team seem to have a grudge against landlords and second home owners. From 1 April 2016, Stamp Duty Land Tax (SDLT) payable on the acquisition of residential property – where the property is a second home or a buy-to-let investment – will see a significant increase in the amount of SDLT payable.
At present, this will only apply to properties purchased in England and Wales. In Scotland, the new Land and Buildings Transaction Tax applies.
For example:
Andy Jones is considering a further acquisition for his Midlands based buy-to-let property business of £300,000. What are the SDLT implications of buying before or after 1 April 2016?
Completion date 1 March 2016 – SDLT payable would be £5,000.
Completion date 1 May 2016 – SDLT payable would be £14,000.
The virtual tripling in SDLT due is a result of the 3% increase in SDLT rates from 1 April 2016. For acquisitions after 1 April 2016 the new rates are:
£0 to £40,000 no SDLT is payable
£40,000 to £125,000 – 3% on total cost of acquisition
£125,001 to £250,000 – 5% on this band only
£250,001 to £925,000 – 8% on this band only
£925,001 to £1.5m – 13% on this band only
Over £1.5m – 15% of the property price above this amount
Will this fuel a rush to buy before rates increase on 1 April 2016? Prospective buyers may want to consider this option, but don’t buy in haste and repent at leisure!