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Higher stamp duty charges from April 1st - are you in the know?

View profile for David Williams
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Shock announcement

In November 2015, the BBC reported on the curve ball that property investors were thrown in George Osborne’s Autumn Statement:

Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty, the chancellor has announced. From April 2016, those in England and Wales will have to pay a 3% surcharge on each stamp duty band.

This shock announcement has caught many by surprise and will see stamp duty tax bills rocket and in some cases, triple.

The facts and figures

Under these measures, consumer champion Which? provides explanation and examples of what these new rates will mean to buy-to-let landlords or anyone buying a second home after April 1 2016:

  • The new second home and buy-to-let stamp duty rates are tiered, just like existing stamp duty rates and income tax.
  • Each tier, or portion of the property price, will be subject to an extra 3% stamp duty on top of the usual rate paid by those buying a home they are intending to live in (see table below).
  • If you're buying a caravan, mobile home or houseboat, you'll be exempt from the higher transaction fees. If the total price paid for the property is under £40,000 you won't need to pay any stamp duty at all
Buy-to-let stamp duty rates
Portion of property priceCurrent stamp duty rateNew stamp duty rate a)
£0-£40,000 b0%0%
£0-£125,000 c0%3%

a - New stamp duty rate will apply to additional properties purchased from April 2016

b - If total property price is £40,000 or less

c - If total property price is over £40,000

Take a look at this example to see how it works:

Property price: £275,000

  • Portion 1: £0 - £125,000 - 3% tax (£3,750)  
  • Portion 2: £125,000.01 - £250,000 - 5% tax (£6,250)
  • Portion 3: £250,000.01 - £275,000 - 8% tax (£2,000)
  • Total paid: £287,000 (£12,000 tax)

We've already exchanged contracts, what happens?

For those already with buy-to-let properties, second homes or currently in the purchase process of a second home, this announcement has created some confusion and raised questions. The Telegraph reports on what the situation is if you’ve already exchanged contracts:

If you are purchasing a property and exchanged contracts before November 25 – when the Autumn Statement was delivered – you will not have to pay the higher tax rate. This is true even if you complete after April 1.

A Treasury spokesman told Telegraph Money that buyers who exchanged after the Autumn Statement, but complete later than April 1, should have been aware of the tax rise and so will be expected to pay it.

It’s not all bad news though, as the article goes on to say:

The good news is that, as the rules currently stand, investors will be able to offset the additional stamp duty, along with other purchase costs, against their capital gains on the property in the future. So even though it is an unwelcome extra upfront expense, a proportion can be clawed back eventually.


Financial website also provides reassurance for homeowners with a second property should they move house (i.e. sell their main residence), confirming:

A Treasury spokesman replied: In this scenario – as long as the person replaced their main residence, they wouldn’t be hit.

Lee Boyce (Consumer Affairs Editor at ThisisMoney) adds:

This is good news for all second homeowners and buy-to-let landlords. A scenario where people were hit for moving their main residence just because they owned additional property would have caused many headaches.

Buy-to-let landlords

For buy-to-let landlords, The Week has recently published an article on how they are getting round looming tax hikes by “rushing to secure mortgages in the wake of November’s shock announcement”.  The Daily Mail also discusses the topic, highlighting that:

Experts think it may be possible to avoid the extra charges if the property is bought and owned by a limited company. The number of applications for mortgages from businesses has skyrocketed. Companies now account for more than a third of buy-to-let mortgage applications, up from 15 per cent in October, new figures show.


If you have any questions about the new stamp duty charges and/or the April 1st deadline, or if you are looking to purchase a second property and would like some advice, please contact Rachel Barrow on 01606 48777.