Budget 2016: higher stamp duty rates confirmed

Topics: Property residential,Government & politics,Conveyancing

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‘Significant investors’ will not be exempt from higher stamp duty land tax rates for additional properties, HM Treasury confirmed today.

The government first announced higher rates of stamp duty on the purchase of additional residential properties in last year’s autumn statement and spending review. The higher rates, which will be three percentage points above current SDLT rates, come into force from 1 April.


The government originally proposed an exemption for large-scale investors, targeted at those who contributed to an overall increase in housing supply.

But following a consultation on its plans, which attracted 909 responses, the budget document says that ‘significant’ investors will not be exempt from the higher rates.

The government, in its Summary of Consultation Responses document, says: 'Many of the consultation responses strongly objected to the idea that the higher rates should be paid by most individuals purchasing additional properties, but those who had already built up an existing portfolio should be exempt.

'On balance...the government's view is that the evidence suggesting that in the absence of an exemption there would be an adverse and material effect on housing supply is not compelling.'

In another softening of the blow, purchasers will have 36 months, rather than 18 months, to claim a refund of the higher rates if they buy a new main residence.

Married couples who have separated will not be treated as one unit for the purposes of the policy.

The government will extend reliefs available from an annual tax on enveloped dwellings and 15% higher rate of SDLT to equity release schemes, property development activities and properties occupied by employees from 1 April.

Reform of non-residential rates will come into effect tomorrow.

Calculations will change for freehold and leasehold premium non-residential transactions so that the rates apply to the portion of the purchase price within each band.

The portion of the transaction value up to £150,000 will be charged at a rate of 0%, the portion between £150,001 and £250,000 will be charged at a rate of 2%, and the portion over £250,000 will be charged at a rate of 5%.

The Conveyancing Association welcomed ‘some of the clarity provided today’.

But chair Eddie Goldsmith said the conveyancing profession now had less than three weeks to prepare for the changes, ‘a time period which is completely inadequate given the increased level of transactions this policy has caused, and the fact that we are already dealing with the traditionally busy Easter period’.

He said: ‘One wishes that the government could have considered the work required by conveyancers in order to put the correct systems and processes in place.’

Readers' comments (7)

  • There seem to be so many loose ends to this new tax it is ridiculous. It is easy to think of all manner of possible loopholes.

    For instance, what does: 'Married couples who have separated will not be treated as one unit for the purposes of the policy.' - actually mean? And how do you police it?


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  • Stamp duty is a pernicious restraint of free trade and a tax on taxed income. It should be paid by vendors who profit from a sale not purchasers struggling to buy a house. It's obvious really.

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  • A friend of mine is in the process of purchasing a house with his girlfriend. they will not complete before 1 April. He presently owns a house comprising five holiday flats plus his own quarters. He intends to retain that building and to let out his living space on again a holiday basis.

    Can anyone say if his giving up his quarters will enable him to recover the 3% stamp duty land tax which, on the face of it, they will have to pay on completion of the purchase. His partner has no other relevant accommodation, they live together in his living quarters.

    Any assistance in answering this one would be very gratefully appreciated.

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  • David, my understanding is that your friend would indeed need to pay the higher rate given that he would own 2 properties at the end of the transaction, and would not be able to recover the additional 3% unless he actually sold his other residence within 36 months of the first transaction.

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  • Many thanks, Lydia, I suspected as much, but your confirmation is greatly appreciated. I doubt if he will sell his existing business, and with it his present accommodation, as that is his source of income.

    (Can't quite work out why two people have given me the 'thumbs down' for asking this question, but there we are, that's life.)

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  • David, I'm not an expert but like Lydia my understanding is that your friend will be liable for the additional 3% SDLT if he decides to keep the holiday flats that he currently owns. But, if his girlfriend does not currently own a property, she might possibly be able to buy the new property in her own name without incurring the additional 3% duty (depending on the exact nature of the 'boyfriend-girlfriend' relationship).. This option would not of course be available to them if they were foolish enough to get married.

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  • Thanks for that, Meredydd both interesting and useful post. She does not have a property at present, but purchasing in her sole name could lead to the end of a beautiful relationship... I shall do my best to mention it as tactfully as I can... and then leave on my summer Grand Tour of EU member states.

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