SDLT Changes 1st April 2016

Stamp Duty Land Tax (SDLT) is a varying lump sum imposed by the Government on both commercial and residential property and land purchases above certain values.

2014 saw changes to the amounts of tax charged on property which left some purchasers with a lower tax bill when they completed their purchases. From 1st April 2016 however, higher rates of SDLT will now be levied on some residential property purchases above £40,000. These increases will effect second homes and buy-to let properties purchased in the England, Wales and Northern Ireland but will not include, caravans, mobile homes or house boats nor will it affect corporate or funds making significant investments in property.

The new rates are as follows:

Stamp Duty Land Tax Bands

Brackets

Standard Rates

Buy-to Let/Second Homes Rates

Up to £125,000

0%

3%

£125 – £250,000

2%

5%

£250 – £925,000

5%

8%

£925 – £1.5m

10%

13%

 

It seems the aim is to make available more first time homes by making the appeal of buy-to lets less so through creating higher purchase costs, alongside the already restriction on tax relief on loan interest and removal of tax relief for wear and tear squeezing the yields on investment properties. The effect on rents given, the mechanisms of supply and demand, and a flood of investors buying up the buy-to -let property before the changes take effect  are yet to be seen. 

Emily Wheatley

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