Increase in Stamp Duty Land Tax when you purchase UK investment property
Published 30 November 2015
The Stamp Duty Land Tax rates and bands were overhauled with effect from 3rd December 2014 making the application of the duty much fairer by removing the so called “slab system”. In the Chancellors autumn statement on 25th November 2015 he announced that from 1st April 2016 there will be a supplementary 3% duty on purchases of residential property that is not to be used as the owner’s principal private residence. This includes second homes, holiday homes and of course rental property.
This measure is targeted at owners with small portfolios and those with more than fifteen properties will be exempt. Purchases of houseboats, caravans and mobile homes are also to be exempt from the extra 3%.
If a landlord added a property costing £250k to his portfolio in the few years before 3rd December 2014 the Stamp Duty Land Tax would have been £2,500. If the purchase had been made between 3rd December 2014 and 31st March 2016 the Stamp Duty Land Tax would have been £2,500. And from 1st April 2016 the Stamp Duty Land Tax will be £10,000.
If the property cost had been £1.5m the Stamp Duty Land Tax would have been £75,000 to 3rd December 2014, then £93,750 until 1st April 2016 and £138,750 thereafter.
See Rates and Tables.
The only glimmer of light for now is that Stamp Duty Land Tax is deductible as an incidental cost of purchase when the landlord comes to sell the property.