Higher rate stamp duty - do I need to pay it?

Most people have heard of the higher rate stamp duty charges for second properties that were brought in by the government on 1 April 2016. However, it still seems that there is some confusion amongst buyers about whether or not they need to pay it.

Recently we acted for a client who thought that anyone who was not a first time buyer would have to pay higher rate stamp duty, which is not the case at all. Obviously he was quite happy when we were able to tell him he could pay £12,000 less stamp duty than he thought! 

Higher rate stamp duty is payable on the purchase of a property if you already own another property at the time. You do not have to own the whole of the property; it would count if you just own a share in another property.

Married couples

If you are married be aware that if your partner owns another property you are classed as having a share in it by marriage even if your name is not on the title deeds. If your partner owns a property in their sole name and you then buy a property in your sole name this purchase may be liable for higher rate stamp duty.

Exceptions to the rule

The main exception to the rule is ‘replacing your main residence’. Say for example you own two properties, one your home and the other, an investment property. You are selling your home and buying another home i.e. simply moving house. Even though you will own two properties, you do not have to pay higher rate stamp duty on the purchase of your home because this is classed as replacing your main residence.

If you are buying another home but have not yet sold your previous home then you will still have to pay higher rate stamp duty when you buy your new home. You can however claim a refund (of the difference between higher rate and standard rate stamp duty) should you sell your previous home within three years.

If you have already sold your previous home, then buy a new home at a later date, you would not have to pay higher rate stamp duty even if you own an investment property because you are replacing your main residence, albeit slightly delayed. On 26 November 2018 the rules in this scenario are changing and we understand a time limit of three years is being brought in for this as well, so you will have three years once you have sold your home to replace it without having to pay higher rate stamp duty.

If you have any doubts about whether or not you are liable to pay stamp duty you should always check. There is a lot of guidance issued by the government on their website and there are examples which cover most scenarios. Please advise your solicitor of all the circumstances that apply – they may be able to save you some cash!


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