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HMRC consults on Stamp Duty Land Tax for “Second” Homes

13th January 2016

HMRC has published a consultation paper and further details of the proposed 3% SDLT surcharge (above current SDLT rates) on “additional” residential properties purchased on or after 1 April 2016. 

The additional charge will apply where the purchaser owns more than one residential property at the end of the day of purchase, but will not apply where the purchaser is replacing their main residence.  However, if a new main residence is purchased before the old one is sold, a purchaser will have to pay the additional tax, and claim a refund if the old property is sold within 18 months. 

For the purpose of the additional charge, married couples and civil partners will be treated as one unit, and can own one property between them (and their minor children) before the surcharge will apply. Other joint purchasers will be caught if one already owns a residential property, with the surcharge applying to the full purchase price.  HMRC does appreciate the potential for unfairness in these circumstances and asks for views. 

The consultation paper states that the higher rates will apply to purchases of additional residential properties which complete on or after 1 April 2016.  If contracts are exchanged after 25 November 2015, the higher rates will apply if the purchase is completed on or after 1 April 2016.

The consultation also proposes an exemption for bulk purchases of at least 15 residential properties in one transaction and seeks views on whether this exemption should be available to individual investors as well as companies.  A number of potential changes to the administration of SDLT are also explained. 

HMRC seeks views by 1 February 2016, with a view to confirming the final details of the charge at the Budget on 16 March.

Katharine Arthur, Head of Tax
Tel: 020 7969 5610

Neil Simpson, Tax Partner
Tel: 020 7969 5512