Understanding higher rates of stamp duty for residential property

Higher stamp duty charges apply to those who fall within certain criteria. Typically, higher charges apply when a purchaser will own two properties or more on completion day.

It is important to note that this does not just apply to property owned in the UK. If you already have a property in another part of the world, and you are purchasing a second property in the UK, the higher rates will apply.  These rules are specific to individuals and rules differ for companies and trusts. Companies for instance generally pay the higher rates.

If you do not own a property already, but you are buying your first property with your spouse or another individual, and they already own a property (or have an interest in another property), the higher rate of stamp duty charges will still apply.  The stamp duty owed is for the transaction as a whole.

Higher stamp duty charges can change, but the most recent charges from September 2022 are as follows:

• Property transfers up to the value of £250,0000 will attract a 3% SDLT charge.
• Property transfers with a value between £250,001 and £925,000 will attract a 8% SDLT calculator.
• Property transfers with a value between £925,001 and £1.5 million will be charged at a rate of 13%.
• Any remaining amount above this figure will be charged at a rate of 15%.

As an example, if you purchase a second property at a price of £400,000, the first £250,000 would be charged at 3%. This equates to £7,500. The remaining £150,000 of the purchase price of £400,000 will be charged at a rate of 8%, which equates to £12,000. Therefore, for this transaction, the total SDLT due would be £19,500.

When purchasing a second property, it is important that you let your conveyancer know that this will be your second property so as to ensure the right amount of tax is paid and penalties are avoided. Your conveyancer will prepare your SDLT return for you, and this will confirm how much you owe to HMRC. SDLT must be paid within 14 days of completion.

If you sell your main residence within three years of purchasing a second property, you can apply for a refund of the higher charges (the surcharge paid), and you will receive the difference as if you were originally taxed at the normal SDLT rates. We are able to assist you with such applications.

Lastly, if you are not a UK resident, there will be an additional 2% surcharge payable. This applies on top of all other residential rates of SDLT including the higher rates for additional dwellings (where applicable).

Further guidance and support for higher rates of stamp duty

Our team regularly deals with Stamp Duty Returns in the context of property transactions and can provide assistance. Our solicitors have extensive experience of rural properties including handling transactions involving septic tanks or complex drainage and if instructed, will be with you all the way to ensure a smooth transaction.

If you wish to obtain a free no obligation quote use our simple online conveyancing quote tool (for properties under £1million) or book an online appointment with one of our team (for properties over £1million). For complex arrangements, it may be necessary to seek specialist tax advice and should this be the case we would of course advise you accordingly.

This content is correct at time of publication