Since December 2014, SDLT on residential property in England, Wales and Northern Island is normally payable based on the progressive rates ranging from 0% (up to £125,000) to 12% (over £1.5million).
A slab rate 15% SDLT can be applied on the purchase of “Higher Threshold Interest” residential property (valued at over £500,000), where no exemption applies.
From 1 April 2016, an additional 3% will be applied to the current SDLT rate for the purchase of additional residential properties above £40,000, such as buy to let properties and second homes.
The higher rate will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property.
There will be a further consultation on the policy detail, including whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.
Following on from the Summer Budget, this legislation is yet another blow to buy to let landlords. The details of how the policy will be applied have not yet been published and it will be important for potentially affected taxpayers to participate in the forthcoming consultation process. For instance, it is not clear yet how this will impact the relatively common position of parents helping children to buy property or of Trusts which own a number of properties for different beneficiaries.