Landlords to be hit with new stamp duty charges from 1st April 2016?

Landlords to be hit with new stamp duty charges from 1st April 2016?

In the 2015 autumn statement, the government announced a consultation period to review Stamp Duty Land Tax on purchases of additional residential properties. If given the go ahead from April 2016 anyone buying a second home or buy-to-let property will have to pay an extra 3% in stamp duty on the day of transaction.

The current scheme applies to those buying a second home or buy-to-let property over £125,001 and is calculated on the different taxable portions of the property value.

What are the new charges?

It is proposed that from 1st April 2016, purchasers of other properties in the UK will have to pay 3% for the first £125,000 and 5 % (instead of 2%) on the amount between £125,001 and £250,000.

The full policy will be outlined in the 16 March 2016 Budget. But it’s expected to look like this:

Band Existing residential SDLT rates Proposed extra rates for landlords
£0 - £40,000 0% 0%
£40,001 - £125k
0% 3%
£125,001 - £250k 2% 5%
£250,001 - 925k 5% 8%
£925,001 - £1.5m 10% 13%
£1.5m+ 12% 15%

So, using a property price of £275,000 as an example, you’ll pay the following tax under the new scheme:

Property price: £275,000

Portion 1: £0 - £125,000 - 3% tax (£3,750)

Portion 2: £125,000.01 - £250,000 - 5% tax (£6,250)

Portion 3: £250,000.01 - £275,000 - 8% tax (£2,000)

Total paid: £287,000 (£12,000 tax)

What properties are exempt?

Only houseboats, caravans, properties under £40,000, commercial or semi-commercial units, and some multiple purchases are likely to be exempt.

Source: Which?

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