Benjamin Franklin famously said that ‘In this world nothing can be certain, except death and taxes’.
Stamp Duty Land Tax (SDLT) is tax on land transactions in England, Wales and Northern Ireland payable to HM Revenue and Customs (HMRC). The current threshold for SDLT payable on transfers of residential properties is £125,000. A Stamp Duty Return must be submitted to HMRC and the tax liability discharged within 4 weeks of completion of the property transaction.
SDLT is a considerable cost that will need to be factored in when deciding whether to progress with a purchase and it is vital that you are fully aware of the full costs involved.
From April 2016, if you are buying a second home a 3% surcharge will apply to the standard rate of SDLT. This will apply if you already own not just a family home but a holiday home, a buy-to-let or have a share in a property of £40,000 or more.
This surcharge also covers any property in any other part of the world, not just the UK. The higher rate will also apply if two people are buying a property and one owns a second home and one is a first time buyer.
If you buy a second home, move in and make it your main residence and then subsequently sell your original home within 36 months then you are entitled to a refund in respect of the higher rate of SDLT paid upon purchase. The application for a refund will need to be made online. As much evidence as possible in respect of the previous SDLT payment, the related sale, and home ownership will need to be provided to the HMRC. This refund process can take up to three months to complete.
First Time Buyers:-
Recent changes to SDLT rates means that first time buyers do not pay SDLT if they purchase a property of a value of £300,000 or less. For first-time purchases above £300,000 to £500,000, SDLT is payable at a rate of 5% of the portion of the purchase price exceeding £300,000. If the purchase price exceeds £500,000 then no relief is available and the standard rate of SDLT will apply to the total purchase price.
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