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Government guidance on who must pay higher Stamp Duty rates

Posted: 8th October 2020   In: Residential Conveyancing

The government has issued guidance on who must pay the higher rates of Stamp Duty Land Tax (SDLT) when buying a residential property in England.

The basic position is that you will be liable for the higher SDLT rates when you buy a residential property (or a part of one) for £40,000 or more, if all the following apply:

You may have to pay the higher rates even if you intend to live in the property you’re buying (and regardless of whether or not you already own a residential property).

This is because the rules do not apply only to you (the buyer), but also to anyone you’re married to or buying with.

The rules apply to you both as if you were buying the property together, even if you’re not.

If either of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole (unless you’re permanently separated).

What property the higher rates apply to

When you know who the rules apply to, you should work out how many residential properties each of you will own at the end of the day of your new purchase.

If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).

Include any residential property that:

 Include your current home, if you still own it at the end of the day you buy your new home. 

The higher rates from 8 July 2020 to 31 March 2021

Purchase Price Rate
up to £500,000 3%
over £500,000 to £925,000 8%
over £925,000 to £1.5 million 13%
over £1.5 million 15%


The higher rates from 1 April 2021

These rates also apply if you bought a property before 8 July 2020.

 

Purchase Price Rate
up to £125,000 3%
over £125,000 to £250,000 5%
over £250,000 to £925,000 8%
over £925,000 to £1.5 million 13%
over £1.5 million 15%


When the higher rates do not apply

The higher rates do not apply to certain people, property and transactions.

 People

 Do not include anyone who will both:

 Property

 Do not include property (or part of a property) if any of the following apply:

The rules also do not apply to property you lease if either:

 Transactions

 If you’re transferring ownership (or part ownership) of a residential property to your spouse, the higher rates do not apply as long as no one else is involved in the transfer. 

If you want to increase the amount of a property that you already own, you do not have to pay the higher rates when all the following apply:

 Reliefs you may qualify for

 You may qualify for a ‘relief’ that reduces the amount of SDLT you have to pay, for example, multiple dwellings relief.

 If you’re buying 6 or more properties, you can choose to pay either the:

 What you need to do

 Your SDLT return must be sent to HMRC within 14 days of the ‘effective date’ of the purchase.

 Pay your bill

 You can pay your SDLT bill as soon as your return has been sent to HMRC.

 When and how to get a refund

 If you sell or give away your previous main home within 3 years of buying your new home, you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.

 You cannot get a refund if you or your spouse still own any part of your previous home.

 Properties sold on or before 28 October 2018

 If you sold your previous main residence on 28 October 2018 or earlier, a refund must be claimed within whichever comes later out of:

 Properties sold on or after 29 October 2018

 If you sold your previous main residence on 29 October 2018 or later, a refund must be claimed within 12 months of whichever comes later out of the:

 Exceptional circumstances

 You may still be able to apply for a refund if you purchased your new home on or after 1 January 2017 and were unable to sell your previous home within 3 years. To be able to get the refund, the delay in selling must be because of reasons outside of your control. These may be, but are not limited to:

 Once the reason has ended, you must sell the previous home to be able to apply for the refund.

Please contact Dipak Odedra or Gurjit Dhadar if you would like advice about the legal aspects of buying or selling a home.

Posted by: Dipak Odedra
Residential Conveyancing
Berkhamsted Office