SDLT surcharge - Expiry of the transitional period on 26th November 2018
First posted by John Shallcross on 21 November 2017, updated on 7 May 2018.
25 November 2017 marked the second anniversary of the 2015 Autumn Statement in which the Government announced that “higher rates of stamp duty land tax” would apply to purchases of “additional residential properties” starting on 1 April 2016. HMRC refer to it as HRAD, it is commonly called the 3% surcharge. It has caused all sorts of complications and Blake Morgan have helped many people understand how it applies to their transactions.
There are transitional provisions which expire for purchases in England completing after 26 November 2018. (For purchases in Wales completing on or after 1 April 2018 “Land Transaction Tax” applies instead of SDLT, but has similar rules.) Buyers in some situations need to complete their purchase by 26 November 2018 if they are to escape the 3% surcharge.
This can affect people who are buying a property to live in as their only or main residence and have other property interests “counting against them”. More specifically it affects those who had previously sold (or at least disposed of their major interest in) another property which they used to live in but:
- Their sale or disposal was before 26 November 2015 or
- They last lived in the property as their only or main residence before 26 November 2015.
Such people would need to complete their purchase by 26 November 2018 or face the 3% stamp duty land tax (SDLT) surcharge.
John Shallcross, Blake Morgan's stamp duty land tax specialist, provides some examples of those buyers who will be affected by the ending of the transitional period on 26 November 2018: