When first announced, the higher rate of Stamp Duty Land Tax (SDLT) payable for buying a second property sounded simple – it was intended to make more residential properties available for owner-occupiers. In essence, if you already own a home and then buy another property – whether to rent out or use as a holiday home – you are required to pay a significantly higher rate of tax.
As ever, though, the full set of rules and subsequent HMRC guidance on its application made things much more complicated, and determining whether the higher rate is payable could turn into a minefield requiring expert advice – as the Deputy Prime Minister recently found out.
Whilst the basic situation does apply, many more purchases and property transfers can become liable to the higher rate. There are a wide range of factors to be taken into account, including whether:
- Your spouse or civil partner owns a property
- You and your partner are separated or divorced
- You own a share of a residential property
- You own a property anywhere else in the world
- You own a property you don’t live in
- You are buying your new main home before selling your current one
- You are the trustee or beneficiary of a trust including residential property
- The property is in England or Wales, as Land Transaction Tax is payable in Wales and has similar – but not identical – rules
How Can We Help?
As your conveyancers, we will submit your SDLT return and pay the tax to HMRC once your transaction completes.
As part of the purchase process, we will ask you for the full details of your property ownership. If there are any potential complications or grey areas, we will recommend that you take further advice from an accountant or tax advisor with SDLT expertise. Whilst more advice would mean an additional cost, this is a small amount compared to the additional tax, penalties & interest charged by HMRC if the rate paid is incorrect.
Note that SDLT is a personal tax return, and as such, the tax payable is tailored to your situation. This means that it’s essential that you disclose full details of your property ownership to your conveyancer so that the correct advice can be given and you don’t end up being chased by HMRC for underpaid tax.
If you’re thinking of buying a property or if you have any questions regarding the above, why not give our conveyancing experts a call? Call us on 01743 248545, or send an email to mail@hatchers.co.uk. We’re here to help.
