The manner in which Stamp Duty Land Tax (‘SDLT’) is charged on second properties and buy-to-let properties is changing in April 2016. As it is the obligation of the purchaser to ensure that their tax return to HMRC is correct, to avoid penalty, it is vital that the information supplied to your solicitor is accurate.

Below is a table to illustrate the increase in rates of stamp duty land tax. If you are buying a property and you do not own another property at the date of completion, you will be subject to the first column of rates. However, if you already own a property at the time of completion you will see an increase in your stamp duty tax payment and will be subject to the second column of rates.

£0 – £125,000 0% 3%
£125,001 – £250,000 2% 5%
£250,001 – £925,000 5% 8%
£925,001 – £1.5 million 10% 13%

As an example, the purchasers of a property worth £200,000 prior to 1 April 2016 will be subject to stamp duty liability of £1,500 if they already own a property. As of 1 April 2016 they will see that stamp duty liability increase to £7,500.

There is, however, no need to worry if at the time of completion you own another property which you are planning on selling in the near future. HMRC are permitting 18 months to complete the sale of your second property and will provide you with a refund of the higher rate of stamp duty if completion takes place within the 18 month ‘grace’ period.

If you have any queries relating to the above issues, please do not hesitate to contact us.