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Update on Stamp Duty rise for additional properties

07 January 2016

HMRC has now opened a consultation as to how this SDLT rise would operate. Although open to change, this article summarises the initial proposal.

You may have seen the announcement of a rise in the rate of Stamp Duty Land Tax (SDLT) for purchases of additional properties announced in the Chancellor's November Autumn Statement.  HMRC has now opened a consultation as to how this would operate. 

The following is a summary of HMRC's initial proposal (please note that it is open to change):

  • The higher rate will be applicable to purchases completing on or after 1 April 2016, unless contracts are exchanged on or before 25 November 2015

The higher rate will always apply if:

  • a purchase is made by a company or a discretionary trust, regardless of the number of properties owned, or their use (unless the large scale investor exemption applies – see later)

The higher rate will apply if:

  • any of the purchasers, or their spouses or civil partners or minor children beneficially own any other property (including property held in trust, and property held outside England & Wales), unless:
    • all of the purchasers, their spouses and civil partners and any minor children do not beneficially own any other property at the end of the day of purchase; or
    • the purchased property replaces a main residence (which is sold on the day of the purchase, or within the previous 18 months), regardless of how many other properties are owned.  If the previous main residence is sold within 18 months following the purchase, the higher rate will be charged, but then refunded on the sale.  Main residence is assessed as a question of fact, and is not open to election

Additional points for property investors

  • Furnished holiday lets are to be treated like any other property, so the higher rate may apply
  • Multiple dwellings relief for SDLT will remain available, which allows the rate of SDLT when multiple properties are acquired together to be based on the average rather than the total value (subject presumably to a 3% minimum)
  • Non-residential land or properties, mixed use properties and mixed transactions will remain taxed under the non-residential rates of SDLT, and the higher rate charge will not apply
  • Purchases of six or more properties will remain eligible for election to be taxed under the non-residential rates of SDLT.  Unlike the present situation, this is now likely to be beneficial if the average dwelling value exceeds £250,000, when compared to multiple dwellings relief

The large scale investor exemption

  • The government is considering providing a particular exemption from the higher rate for large scale investors, as the government states that these investors actually boost rather than restrict the national housing stock.  Two alternative criteria have been suggested, either purchases of 15 or more properties would be exempt, or landlords holding 15 or more properties would be exempt.  The consultation will ascertain which of these would be fairer, and whether this exemption should be available to all owners, or restricted only to companies

Planning opportunities

  • In certain circumstances, there may be opportunities to avoid the charge if purchases are made using life interest trusts, though the choice of beneficiary would need careful thought
  • If newlyweds are to purchase a new marital home (where one spouse already owns a house they do not wish to sell), it may be sensible for the other spouse to purchase the new home prior to the wedding
  • If multiple properties are being purchased, and the large scale investor exemption does not apply, it may be beneficial to be taxed under the non-residential rates (by either purchasing a minimum of six properties and electing for multiple dwellings relief, or including a non-residential element in the purchase)
  • Where possible, transactions should be hurried through prior to 1 April, to benefit from the existing rates

We will provide a further update once the outcome of the consultation is known.

Further reading: Sharp rise in SDLT for buy to let landlords and second home owners (3 December 2015)


If you or your clients would like to discuss this, or any other aspects of property taxation, please contact our Private Client team on 0113 244 6100.

You can also keep up to date by following Wrigleys  Private Client team on Twitter here

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors


January 2016




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