"The changes are due to apply from April Fools Day, so anyone seeking to buy a second home, buy-to-let or residential investment property should keep this in mind!"
Anyone looking to buy a second home, residential buy-to-let, or investment property before the proposed increases in SDLT are introduced, should note midnight on 31 March 2016 as the time and date by which they must complete their purchase. This applies unless contracts were exchanged on or before 25 November 2015.
“The timing of this tax hike might appear unusual for individuals used to tax changes which normally take effect from the start of the tax year, 6th April, but the Chancellor has named the 1st April as the date from which the new rates will apply. Missing the date by a few days could cost thousands of pounds and I fear many people could inadvertently miss out,” said Lee Blackshaw, head of the Manchester private client team at Smith & Williamson, the accountancy and investment management group.
Currently, the average cost of a property in the North West is £116,152*. So the SDLT charge, if making that acquisition on or before 31 March 2016, is £0.**
However, a property being acquired as a second home for the same amount just a day later on April the 1st would potentially cost £3,484 in SDLT.
Lee adds: “The changes are due to apply from April Fool’s Day, so anyone seeking to buy a second home, buy-to-let or residential investment property should keep this in mind!”
Confirmation of how the new rules will apply is expected in the Budget on 16th March – potentially just days before the new charges kick in.
SDLT is paid on property when the purchase is completed. It is calculated according to the purchase price. If buying residential leasehold property you pay SDLT on the purchase price of the lease using the rates below.
SDLT generated £10.7bn for the Exchequer during 2014-15 according to the statistics from HMRC (issued January 2016).
Using 1st April as the date from when the new SDLT rates will apply coincides with the timing of a number of other changes in business taxes.
*The Land Registry’s figures, published January 2016