The Chancellor announced in the Autumn Statement last November that he would be introducing new rates of Stamp Duty Land Tax (SDLT) on purchases of buy to let properties or second homes. An additional 3% SDLT charge will apply to the purchase of residential properties caught by the new rules and this change is expected to come into effect for completions on or after 1 April 2016. There is an exemption from the charges for transactions under £40,000.
In December the Scottish government announced a Land and Buildings Transaction Tax (LBTT) supplement on additional homes. A bill has been introduced in the Scottish Parliament to introduce similar changes to LBTT.
The government is currently consulting on how the rules will be implemented and in which circumstances they will apply. It should be noted that the proposed changes will significantly increase the SDLT and LBTT on the purchase of second homes.
The rules will also impact on those individuals who purchase a new home where they have yet to sell their current home. The higher SDLT and LBTT rates would be payable on the purchase of the second property although this additional tax may be refunded if the first property is sold within 18 months.
To read the consultation which includes some examples of how the rules will operate, click here
Please also do get in touch if you would like specific advice on how these rules will affect you and whether or not you should buy or sell before or after April 2016.