Tax bands at a glance

Post April 2016:

Band: Market Price (£)  Residential
0 – 40,000  0%
0 – 125,000  0%
125,001 – 250,000  2%
250,001 – 925,000  5%
925,001 – 1,550,000  10%
1,500,001 and over  12%

Band: Market Price (£)   Additional Properties
0 – 40,000  0%
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 over  15%

A useful tool to calculate what level of stamp duty applies to you, can be found here;

Additional residential properties;

Stamp Duty Land Tax has changed such that, as of April 1st 2016, all additional properties costing over £40,000 and over, will be subject to a 3% duty surcharge.

The table below sourced from Gov.UK determines what is being classed as a second property;

What if we buy just in my wife/husbands name, who doesn’t already own a property?

Married couples and civil partnerships are classed as one, whether or not both names are on the title deeds of the first residential property.
The purchase will therefore be subject to higher stamp duty land tax rates.

What if I am buying with someone who doesn’t own a property but I do?

Even though this will technically be the only property the other person will own, if you are to be a named purchaser, the additional 3% will apply. The only way this can be avoided is if the purchase is made in the sole name of your co-purchaser, if you are taking a mortgage, of course this will be subject to meeting the lender’s affordability criteria.

What if I am helping my child to buy their first property?

If you are only gifting a deposit to your child, they will not be subject to pay the higher rates

If, however, for affordability purposes a parent, who already owns a property, will be named on the mortgage and the title deeds, as well as the child, then they will be subject to pay the higher amount.

Some lenders will permit a situation whereby the mortgage may be in joint names but the purchase in the sole name of the currently non-owning party.

What if I am selling my main property but have not been able to do so before the purchase of my new residence completes?

You will still need to pay the higher rates as you will technically own more than one residential property after completion. You are however eligible to claim back the additional 3% subject to a 36-month period, as your intentions were to replace your main residence and not purchase an additional property.

What if I purchase the property in the name of a Limited company?

1. Will I still have to pay the surcharge by setting up a limited company? 

You will not be able to set up a limited company for the purpose of purchasing properties without the Government checking for tax avoidance.

2. What if I already have a limited company? 

The same rules apply – you will still be subject to pay the higher tax rate.

What if I have inherited a property?

If you go on to buy an additional property without selling the inherited one, you will have to pay the additional stamp duty on that purchase.

If you have a share of – 50% or less – in a single property which had been inherited within 36 months prior to buying another home, then it will NOT be considered as an additional property. 

What if I own a property and wish to buy another to develop/ build and sell and not for myself to live in?

You will still be required to pay the higher rate. As at the time of the purchase you will own more than one residential property.

What if I am a major property investor?

You will still be liable for the additional charge as you own additional properties.

If you are a ‘bulk-buyer’ of 15 properties or more in one transaction you are regarded as contributing toward the housing supply and will be exempt from paying the rates.

What if I am buying my first property in England but I own abroad?

If you own a property regardless of location, it will be classed as an additional property and therefore the new stamp duty rates apply.

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