Higher Rate Stamp Duty Land Tax for Residential Properties

Higher Rate Stamp Duty (an additional 3% duty over normal rates) does not just apply to the purchase of buy to let/holiday homes.  It can apply to most property purchases where you (or a spouse) own another property (or an interest in one over £40,000) here or abroad.  It does not apply where you sell your main residential home and buy another main residence at the same time or later.  But the following ‘question and answer’ examples show some situations where additional stamp duty is payable:

Q.  I am buying my first property to live in, but I already own a buy to let property.  As a purchase of my first home, will the additional duty apply?

A.  Yes, as you already have an interest in another property and your purchase is not ‘replacing’ an existing main residence.

Q.  I am helping my daughter buy her first house.  I own my own house.  I will have a percentage share in my daughter’s house.  Is additional rate duty payable?

A.  Yes it is payable on the full purchase price of the house.  If you made an outright gift to your daughter or a loan not linked to the value of the house in any way, additional duty would not apply.

Q.  I am buying a shop which has a residential flat above.  I will rent both out.  Will additional duty be payable?

A.  No, the duty does not apply to commercial or mixed residential/commercial property.

Q.  We are buying our new main residence before we sell our existing main residence, which we are going to renovate before we sell.  Will additional duty apply?

A.  Yes, as at the time of purchase you will not be replacing your previous main residence.  If you subsequently sell your previous main residence within 3 years of the purchase, you can then claim back the extra stamp duty from HMRC.

The rules surrounding additional rate Stamp Duty are quite complicated and the additional rate is payable in many situations.  If in any doubt, take professional advice.