From the 1st April 2016, Stamp Duty rates for buy-to-let and second homes increased.
If the property you are purchasing is a second home or you will be renting out, you will be charged a higher rate of Stamp Duty. For further clarification please visit the Government’s Stamp Duty Land Tax website at https://www.gov.uk/stamp-duty-land-tax.
2015’s Autumn Statement announced a 3% additional rate of Stamp Duty Land Tax (SDLT) on purchases of additional properties such as buy to lets and second homes with effect from the 1st April 2016. Because stamp duty is tiered (see below table), you will pay a different stamp duty rate on different portions of the property value.
Stamp Duty Rates for Buy to Let / Second Properties from 1st April 2016
| Brackets | Standard rate | Buy-to-let/second home rate (1st April 2016) |
| Up to £125,000 | 0% | 3% |
| £125,001 – £250,000 | 2% | 5% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1.5m | 10% | 13% |
| over £1.5m | 12% | 15% |
Source: HMRC
Example — How to work out the new higher rates of Stamp Duty Land tax
The Stamp Duty due on a purchase of buy to let/second home for £300,000 that is liable to the higher rates would be £14,000 calculated as follows:
| Charge | |
|---|---|
| 3% on the first £125,000 | £3,750 |
| 5% on the next £125,000 | £6,250 |
| 8% on the final £50,000 | 8% |
| Total stamp duty land tax due | £14,000 |
Please note that every scenario is different. An example of where the higher rates may be applicable would be a Remortgage with a Transfer of Equity (Residential or Buy-to-let) where the chargeable consideration is £40,000 or over.
There are also circumstances where the higher rates are not applicable, for example, a first-time buyer will not have to pay the higher stamp duty rates when their first property is a buy-to-let property.
For further information or help with a calculation, please see the Government’s Stamp Duty Land Tax pages.
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