Further Stamp Duty Land Tax Changes
The Chancellor announced a number of changes to Stamp Duty Land Tax (SDLT) in autumn 2018. The new SDLT changes, which are due to be implemented this year, include higher rates of SDLT for foreign property buyers, changes to the filing and payment process and an extension of first time buyers' relief for shared ownership properties.
Higher rates of SDLT for foreign buyers
The government has announced proposals to impose an SDLT surcharge for foreign buyers. It is proposed that foreign buyers should pay 1% extra on top of the existing SDLT on second homes and buy-to-let purchases in England and Northern Ireland. The proposal is to be implemented after consultation, which is due to be published shortly. The SDLT surcharge is likely to affect London developers, who are more reliant on international sales, than those in the South West.
Changes to SDLT filing and payment process
Under the current legislation, the deadline to submit a SDLT return and pay any tax due is 30 days from the effective date of transaction. For the purposes of SDLT the effective date is usually the date of completion or the date of acquisition of an option.
The government has shortened this period from 30 days to 14 days for transactions with an effective date on or after 1 March 2019.
SDLT relief on shared ownership properties
Relief for first-time buyers will now apply to those who are purchasing a property on a shared ownership basis and have elected to pay SDLT in stages. Provided that the market value of the property is £500,000 or less, first-time buyers of a shared ownership property will not pay SDLT on the first £300,000.
The changes are retrospective and a refund can be claimed on any purchase that was completed on or after 22 November 2017.
SDLT rates on additional dwellings
Higher rates for additional dwellings were introduced from 1 April 2016 for anyone purchasing a property in addition to their main home. However, buyers were only able to claim a refund for any additional SDLT paid if the intention was to use the second home as a main residence and the former home was sold within 36 months. In addition, refund applications had to be submitted to the HMRC within 3 months of the sale of the former main residence. The time period has now been extended and buyers will have 12 months to apply for a SDLT refund after completing the sale of a former main residence.