It is now just over a year since revised rules relating to Stamp Duty Land Tax implemented.
The aim seemed straightforward; SDLT payable on the purchase of our home is payable at a basic rate, but if we buy an additional residential property we pay the normal rate plus a 3% surcharge.
However in practice the legislation can give rise to many surprises and anomalies;
For example, say Mr and Mrs C lived in a cottage provided by Mr C’s employer, several years ago they bought a buy to let property. Mr C has now changed his job and no accommodation is provided. They decide to buy a home to live in, without selling the buy to let. They must pay a surcharge on the property they are now buying because they already own a property. If Mr and Mrs C had always owned their home, and were now selling and replacing it, normal rates would apply.
Married couples are treated as one entity; so, say a couple Andrew and Belinda, both home owners decide to marry and move in together into Andrews’s house; Andrew can afford the mortgage so there seems no need to put the property in joint names. Belinda decides to sell her house and replace it by a small flat, and the flat is nearby that will be more convenient to let out, than her former home. Because they are a married couple the purchase of the new flat will be subject to the surcharge. If they were not married it would be at the normal rate
These are two very specific examples. Lease Extensions, Transfers of Equity, Company purchases, people owning property abroad, partnership property and more can all be caught by the surcharge. There are also some surprising exceptions. If you or your spouse any interest in another property, it might be worth getting advice on SDLT before buying, to help with budgeting.
It might even affect your actions – Stamp duty considerations might not have deterred Andrew and Belinda from marrying, but they might wish Belinda had bought her flat before the wedding, they could have saved enough to pay for an expensive honeymoon!