What does the 3% Stamp Duty Land Tax rate hike on additional properties mean for you?
The Chancellor's Autumn Statement was full of optimism and wide sweeping declarations about a greater United Kingdom, but the picture on Stamp Duty Land Tax is not all sunshine and roses. George Osborne announced this afternoon that from April 2016, SDLT will be increased by 3% on residential buy-to-lets and second homes and will start for properties bought for more than £40,000. The top bracket of SDLT will therefore rise from 12% to 15%. This, coupled with the unfavourable changes to the deductibility for interest and 10% wear and tear for income tax purposes announced during the Summer Budget, firmly solidifies the government's crackdown on investments in the residential property domain.
There is to be consultation as to whether corporates and funds with more than 15 properties will be exempted from the higher rates.
Although a formal consultation will be undertaken at a time to be confirmed, a number of questions have already arisen, such as the definition of "residential". Does a farmhouse with substantial paddocks count as residential? There is also speculation that the change in rates will create pressure to complete property purchases before the 1 April 2016 deadline.
If you have any questions in relation to the recent SDLT changes made in the Autumn Statement 2015 or otherwise, please contact our SDLT specialist, John Shallcross, on the information below.