19 June

CHANGE TO HIGHER RATE STAMP DUTY LAND TAX – COVID

    CHANGE TO HIGHER RATE STAMP DUTY LAND TAX – COVID

The higher rates of Stamp Duty Land Tax (SDLT), which adds a 3% surcharge to the usual rates of SDLT, will be due where an individual (either on his own, jointly or his spouse or civil partner) purchases additional residential property with a value of £40,000 or more and certain other conditions are met. There is relief from the surcharge where the new property is intended to be the replacement home, provided the existing home has been disposed of.

Due to Covid-19, many house sales have been delayed. As a result, HMRC has announced on 3 June that a refund may still be granted if the new home was purchased on or after 1 January 2017 and the three year period has passed. To be able to get a refund after three years has passed, the purchaser must evidence that the delay in selling their previous main residence is due.

Where an individual has met all the conditions for the surcharge because they have not been able to dispose of their previous main residence, the higher rates will apply initially but an application can be made for a refund of the surcharge if the previous main residence is disposed of within three years.

Surcharge liability

The surcharge applies to anyone who is buying an additional property. You will also have to pay the higher rate of stamp duty if the property you are buying replaces your main residence, but the main residence has not yet been sold. In this instance though, you can apply for a refund provided the previous main a residence is sold within 36 months.

The surcharge even extends to homes abroad. If you already own a home in Spain and buy additional property in England, you will have to pay a higher rate of stamp duty.

Exempt properties

Some properties are also exempt from the surcharge – but it’s a limited number. Caravans, mobile homes, and houseboats are not currently liable for stamp duty. The government is also excluding all properties worth less than £40,000. Residential properties worth less than £40,000 do not count when determining if additional property is being bought.

Overseas stamp duty

The UK government is considering introducing a 2% stamp duty surcharge on properties purchased by non-UK residents. This is due to ‘some evidence’ that house prices are being inflated by buyers from overseas.

A non-UK resident is someone who has spent under 183 days in the UK over the previous 12 months. However, if that person spends a minimum of 183 days in the UK, year after purchasing the house, they can apply for a refund.

 

 

 

 

 

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