For residential property there are now 2 sets of rates:
£0 - £125k. 0% 3%
£125- £250k. 2% 5%
£250-£925k. 5% 8%
£925-£1.5m. 10% 13%
£1.5m + 12% 15%
If you buy your first house, whether you are going to live in it or rent it out you pay Standard Rates
If you buy a second house to rent out, or for another family member to live in you pay Higher Rates
If you own 2 or more properties and sell the one that is your main residence and buy one that will become your new main residence you will pay Standard Rates. But if you are not able complete the sale and purchase at the same time you will have to pay Higher Rates on the new house but when you sell the first one you can claim the extra tax back provided it is sold within 3 years
As long as you have only 1 house or if you move you are replacing your main residence it is Standard Rates that apply.
However, if the first time buyer buys a first house, rents it out and then later buy a a house to live in the Higher Rate will apply even though this is the first main residence.
Married couples/Civil Partners - as they are treated as 1 unit they can only have one main residence between them. So if one of them owns another property higher rates will apply. Where separated there will need to be a Court Order or Deed of Separation under seal if the Higher Rates are not to apply.
Joint purchasers - if any of the joint purchasers has 2 or more properties and is not replacing a main residence the Higher Rates will apply and to the whole purchase price.
Questions may arise where a person already owns and lives in 2 houses, perhaps a flat in London during the week and a house in Worcestershire for the weekends. Which property is the main residence? The Revenue will decide based on facts such as where most time is spent, where children go to school, where registered to vote, where a person works, the level of possessions and furnishing.
If non-residential property is bought the Higher Rates cannot apply even if the property is later converted to residential.
There is a Multiple Dwellings Relief where 6 or more residential properties are bought together. But if you buy a property through a Company the 1st purchase by the Company will pay Higher Rate.
Trusts can often be used to buy property. Advice will be needed but Bare Trusts will be treated as if the beneficial owner was buying themselves, disabled trusts, life interest trusts and interest in possession trusts will be treated as if bought by the beneficiary, but discretionary trusts will be a problem with Higher Rate payable.
Commercial Property SDLT:
The Chancellor has announced in his 2016 Budget that the Stamp Duty for commercial property will also change. The changes have been promoted as being small business friendly. It is difficult to see how a small business that in intending to purchase a commercial property will benefit from these changes.
The changes are as follows (and of immediate effect):
Up to £150k 0%
Over £150k – 250k 2%
Over £250k 5%
There are transitional arrangements for the transactions that have exchanged contracts before the Budget announcement and that are to complete at a future date.
For additional information on the stamp duty changes for residential and non-residential properties, please contact us on 01905 721600.