The UK government has now published details of the new higher stamp duty tax which will be applied to “additional residential properties.” This, only three months before it comes into effect.

1. Quick Guide to ... Stamp Duty Changes
The UK governmenthasnowpublisheddetailsof the new higherstampdutytax whichwill be applied
to “additional residential properties.” This, only three months before it comes into effect.
Chancellor’s announcement
In the autumnstatement,UK ChancellorGeorge Osborne announcedthatanyone buyinga property
inadditiontotheirmainresidence wouldhave topay 3% more instamp dutyfrom 1st
April 2016. This
appliestopropertiessuchasa secondhome inthe country,or a buy-to-letinvestmentproperty.The
Treasuryopenedaconsultationonthe proposalsonlylastweekandthe consultationwill rununtil 1st
February 2016. The new rules will then be confirmed in the budget on 16th
March 2016.
These changescouldpenalisemarriedcouplesandparents,grandparents,auntsanduncleswhowant
to helptheirchildrenor kinonto the propertyladder.JamesTurnerof Turner Little commentedthat
“The surcharge couldincrease the costof buyinga secondhome significantlyandreduce the appetite
for buy-to-letand holidayhome purchases.Due to its timingthere couldbe a rush by lots of people
looking to complete before April.”
Effects of changes
All additional propertiescosting£40,000 or more will be subjecttothe new levy.The stamp dutybill
on homesworthup to £125,000 will be 3% (currently0%) and 5% insteadof 2% for the nextband up
to £250,000. For the higher bands, the rates will be 8% up to £925,000 and 13% up to £1.5 million.
Above that it is a top rate of 15%.
Anextrahome boughtfor£125,000 will trigger astampdutybillof £3,750(3%) comparedwithnothing
today.At the nextlevel itcouldbe up to £12,500 extraon a £250,000 property,comparedto £5,000
today and at £900,000 would trigger a stamp duty bill of £62,000, compared to £35,000 today.
Purchasing additional property
More worrying still,the taxman will decide whether a purchase is an additional property or not. He
will dosoby checkingdetailssuchaswhere the buyerworks,where the buyers’childrengotoschool
and where theyare registeredtovote. The higherrateswill notapply inScotland,whichhas its own
“transaction tax” system and mobile homes, caravans and houseboats will be exempt.
If you buy a new home but have not yet sold your current one or the sale of your current one falls
through, then you will have to pay the extra duty. However, the proposals indicate that you will be
able to claim a refund providing your original home is sold within 18 months.
If you complete a sale that’s currentlypendingor intended purchasesbefore 1st
April 2016, the new
ruleswill notapply.Completionby that date isessential however, andexchange of contracts itself is
not sufficient. There is an exemption and that relates to exchanges which took place before 25th
November2015, the date of the autumnstatement.Evenif youcompleteinthese casesafter1st
April
2016, you will not have to pay the extra tax.
Breaking it down
If youhave a home abroad and wantto buyanotherone inthe UK,the one here will be countedasan
additional home and you will be taxed accordingly. If you want to help your child onto the property
ladder,as longas the propertyisheldinthe name of your son or daughter,and itis theironlyhome,
the standard rate will apply,evenif youhelpedwithadepositorare a guarantor on the mortgage.If
it is bought in your name, or even jointly with your child, then it will incur the extra stamp duty.

2. Marriedcoupleswillbe treatedasasingle unit,sotheywillnotbe able toavoidthehighertax byeach
owning a home. Unmarried couples will be able to have a property in each name, but both must be
“main residences” so they will have to live separately to avoid the extra tax on a second home.
Turner Little
Turner Little was foundedin 1998 and it has since become a well-established UK based professional
Company Registration Agents, Registered Bank Intermediaries and Business Consultants, as well as
Trust providers.