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Higher rates of Stamp Duty Land Tax

31st January 2017 | Written by In Accountancy | Categories : News

Since the 1st April 2016 HMRC introduced higher rates of Stamp Duty Land Tax (SDLT) for purchases of additional residential properties. They have recently announced an online service where property owners can apply for a repayment of higher rates of SDLT for any other properties owned, only if the property sold was previously a main home.

The reason for the changes

The higher rates were introduced mainly to target purchases of buy to let properties or second homes. However, there are some anomalies to this rule and some will have to pay the additional charge even though the property purchased will not be a buy to let or a second home. The higher rates are three percentage points above the normal rates. The rules for the higher rates include:

  • If you already own or partly own a property and transact to purchase another property without disposal of the first
  • If at the end of a purchase transaction you own two or more residential properties

There is also a 36 month rule including the following details:

  • If a new main residence is purchased before disposing of a previous main residence, the higher rate will be payable. But you will have 36 months to dispose of the previous main residence and claim a refund
  • Purchasers will have 36 months between selling a main residence and replacing it with another before having to pay the higher rates
  • If you have inherited a small share in a property within the 36 months prior to a transaction will not result in higher rates as it is not considered an additional property

The new online system will include a refund process which will help those who were affected by the higher rate tax, only if the SDLT paid was on a property was a previous main home.

If you have any further questions regarding your Stamp Duty Land Tax, contact us on 0161 456 9666 or askus@in-accountancy.co.uk.

For more information: GOV.UK SDLT repayment of Higher Rate