Stamp Duty and Additional Properties: How does it work?

By Louise Burgess on

I am purchasing an additional property, how does stamp duty work?

From 1st April 2016, the government introduced a stamp duty for people who already own a property and are purchasing an additional property. This means that you have to pay stamp duty at the normal rate together with the additional rate payable which is based on the purchase price of the property.

So here is what you need to be aware of when thinking of purchasing an additional property:

Stamp duty rates

The current stamp duty rates are set out in the table below and depend on the purchase price of the property.

Table A shows the rates payable on any property and Table B shows the additional rates payable if you are purchasing an additional property.

Table A

Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

Table B

Purchase price Rate
Up to £125,000 3%
Over £125,000 and up to £250,000 5%
over £250,000 and up to £925,000 8%
Over £925,000 and up to £1.5 million 13%
Over £1.5 million 15%

An additional property would attract stamp duty from both Table A and Table B therefore you must be prepared to pay the standard stamp duty in Table A as well as the additional rate in Table B based on your purchase price.

You can calculate the stamp duty payable on the government website if you are unsure of how much you will be liable to pay.

Joint Purchases

If you are purchasing with another individual who already owns an additional property, you will be liable to pay the additional rates.

If you’re married or in a civil partnership, buying a property and your spouse or civil partner already owns a property you may still be liable to the higher rates. But you may be able claim a refund if they then go on to sell it.

Main Residence exception

You will not have pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold. This means that if you are selling one property and purchasing another simultaneously, the transaction will not attract additional stamp duty.

If there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase, you will have to pay the additional rate on completion but you may be able to get a refund on the additional stamp duty paid if the previous main home is sold within 3 years.

If you already have 2 or more properties, and you sell your main residence, you won’t have to pay the higher rate if you buy a new main residence within 3 years.

Keeping HMRC informed

On purchasing a property, most solicitors will deal with the transaction from start to finish including the payment of stamp duty on your behalf. On instructing a solicitor, it is important to discuss with them the payment of stamp duty particularly if you are purchasing an additional property.

If you do not pay the correct stamp duty on completion of a purchase, HMRC will write to you directly to request the amount due and may also impose fines for late payment.

You must therefore be prepared for any stamp duty costs from the outset of your purchase and budget for the payment of this.

Get in touch

If you are purchasing an additional property or believe you may end up owning two properties whilst the sale of your main home completes, speak to our Residential Property Solicitors in LeedsWakefieldBradfordManchester and London on 0113 2449931.