It would seem that the Government like to introduce a two yearly change to Stamp Duty, and 1st April will herald the unwelcome changes for 2016. We have finally received the full details of what the changes will bring.
The higher stamp duty rate is to apply to most purchases of additional properties in England, Wales and Northern Ireland and will apply if you own more than one property (anywhere in the world). The majority of transactions, such as first time buyers, or home owners moving home from one house to another should not be affected by the new higher rate.
For married couples and civil partners living together these are to be treated as a ‘single unit’. This means that if Partner A owns a property already, then the higher rate of stamp duty should be paid on a purchase of another property by Partner B. Even if that property is the only property that Partner B will own. This will not apply where couples have separated where there is a Deed of Separation sealed by the Court.
It seems the only real exemption will be the purchase of a “main residence”, and when the purchaser’s current main residence is being sold. It is not clear, however, from the consultation paper whether this means that an owner of a Buy to Let property, which has never been used as their main residence, can purchase their first main residence at the usual standard rate.
What is your “main residence” will be assessed by HMRC based on various factors such as: where the individual and their family spends their time; if the individual has children, where they go to school; which residence the individual is registered to vote; where the individual works; the location and degree of furnishing and location of moveable possessions; and the correspondence and registration addresses given to various organisations. It seems as though the Government is leaving little room for purchasers to try and decide which property they call their main residence; as an attempt to prevent any potential tax avoidance.
The higher rate payable on all relevant transactions that complete on or after 1 April 2016 (unless contracts were exchanged before 25 November 2015) will be 3% higher than the current SDLT rate applicable.