Don’t worry because here is all you need to know.
As of 1st April 2016 higher SDLT rates will apply to additional residential properties purchased in England, Wales and Northern Ireland on or after that date. The higher rates will be 3 percentage points above the current SDLT residential rates and only apply if the property costs more than £40,000. Please see the table below. Also bear in mind that your first property does not have to be within the UK.
If you already own more than one property and you sell the property you live in, and then replace it, you have replaced your main residence and therefore you are not liable for higher rate of tax.
The government will exclude all purchases of caravans, mobile homes, house boats, plots of land and commercial properties from the higher rate.
If you already own a property and then inherit another, you will not be liable for the higher rate of tax.
The complicated part…
You will not be subject to the additional tax if you dispose (sell or gift) your first property. However if you purchase another property before selling your main residence, you will have to pay the higher rate of tax, however you may be able to claim a refund through HMRC if the property is sold within 36 months (you must claim your refund within 3 months of sale).
If you own more than one property and sell your home but cannot immediately buy a replacement, you again have 36 months to buy another otherwise you will be subject to the higher rate.
If you are buying a property with a partner and either of you already own a property (you don’t both have to own it) then you will have to pay the higher rate tax.
So, you’re probably wondering what the ramifications are for divorcing couples and their financial settlements…
If you are in the process of getting a divorce and you want to buy a new property before your finances have been settled, you will be liable for the higher rate of tax. However, if you go on to sell your share of the property to your ex-partner, or sell the property entirely, you may get a refund as long as it is within the 36 months’ time limit.
You need to be aware that HMRC treats married couples as one unit and as living together so if you are separated and planning to buy a property but your spouse already owns one, you could be liable for the higher rate of tax unless you can prove (usually by court order or Deed of Separation) that you are permanently split from your spouse.
For more information on the SDLT change please click here.
For more information on Divorce/ Ancillary Relief, or any other family law issue that you and your family may be facing, please contact a member of our dedicated family law team on 0845 287 0939. Alternatively you can complete an online enquiry form and a member of the team will get back to you.