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bigduckontax, Accountant
Category: Tax
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This is a question about the new stamp duty legislation

Customer Question

Hello, this is a question about the new stamp duty legislation that is coming into effect on 1 April. I own a 1-bedroom flat in London (worth about £460,000), and am planning to buy a house together with my partner in Canterbury (purchase price £600,000). The flat is in my name only; the new house and mortgage would be in both our names. I will have to rent out the London flat in the future in order to be able to afford the new mortgage payments for the shared property, the family home (I think it will then constitute a 'let to buy' mortgage, but so far it has been my main residence, although I also spent a lot of time at my partner's property in the past years). The new property will be our family home, we have a young daughter together. Will we be be affected by the second home stamp duty charge in the case described above if we complete after 1 April? If yes, are there any ways of avoiding that charge other than completing before the deadline, which I am not sure is realistically possible at this stage?
Many thanks,
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Anna, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Stamp Duty Land Tax (SDLT) will be some GBP 2625 on the new house on current rates.
On the second home rate from All Fools Day 2016 it will be GBP 38000.
As Benjamin Franklin once sagely observed in life there are but two certainties, death and taxes! Unless you complete by the relevant date you will be charged the higher rate.
I am so sorry to have to rain on your parade.
Customer: replied 2 years ago.
Sorry, but that does not sound right. Under current legislation, isn't the stamp duty we have to pay for a £600,000 property in the region of £20,000, rather than £2625, as you indicate? Could you please double-check that number?And my question was a bit more complex: I wanted to know whether our case would definitely fall into the second-home case scenario under the new legislation (I have already looked the number you indicated up myself using the online stamp duty calculator). My partner would only own one shared family home property, after all, and mine is a 'let to buy', not a 'buy to let'. Are you absolutely certain that the legislation has already been firmed up in cases like ours?Please elaborate a bit further on these points.
Expert:  bigduckontax replied 2 years ago.
It isn't! I had a mental aberration when I replied. The rate is 5% before 1 April 2016, GBP 30K and 8% after, 48K. Deep apologies for the error.
I am of the opinion that your case will definitely fall into the second home category. A case could be made for the new home to be your primary residence, but that does not detract from the fact that it will be a second home and attract the higher rate of SDLT.