If you are buying a home costing more than £125,000 and you are not a first time buyer, then you will have to pay Stamp Duty Land Tax (“SDLT”) on your purchase.
SDLT is another expense and consideration when purchasing a property, and is primarily based on the property value and the circumstances of the buyer.
Standard Stamp Duty rates are as follows:
- £0 – £125,000 = 0% SDLT
- £125,001 – £250,000 = 2% SDLT
- £250,001 – £925,000 = 5% SDLT
- £925,001 – £1.5 million = 10% SDLT
- Over £1.5 million = 12% SDLT
All purchasers of an additional property will have to pay an extra 3% SDLT, on top of the current rates for each band. However, if you own two properties on the day of completion of the purchase of your second property, you are still obliged to pay the higher rate of SDLT, even if you plan to sell your original property. This can of course be extremely costly in terms of the SDLT, however, a refund is available if you sell your former property within three years of your new purchase. Therefore, you will only have to pay the “standard rates”.
Due to the Covid-19 lockdown, more than 450,000 people were unable to progress their move, which has left some people out of pocket, as they have neared the end of their three-year time limit for a claim expiring whilst in the middle of the sale of their primary residence. This has meant that they have been unable to claim back their SDLT overpayment on their new purchase and as a consequence, they are thousands of pounds out of pocket.
In light of these unprecedented times, HMRC has released further guidance allowing some individuals, who completed after the three year time period, to still be able to claim back the additional stamp duty paid. The Government has advised that this will be on a case by case basis where the person is able to show that:
- They were prevented by some exceptional circumstances to complete within the three year period.
- They sold the property as soon as they could after being prevented.
Unfortunately any downturn in the property market or change in heart will not be classed as an exceptional circumstance. However, a completion date being delayed due to lockdown being in place would qualify.
You can easily apply for an SDLT refund and read the up to date guidance on the Government website.
If you would like further information on SDLT or on Residential Property in general, please contact Amy Bailey on 01494 411180 or at firstname.lastname@example.org.