Autumn Budget 2024: SDLT Changes and What They Mean for You
The recent Autumn Budget 2024 announcement by Chancellor Reeves introduced several significant changes, particularly to Stamp Duty Land Tax (SDLT). These changes, effective from 31 October 2024, are designed to address evolving property market dynamics and impact individuals and businesses investing in residential properties. Below, we break down these changes and their implications.
Key Changes to SDLT
The SDLT surcharge on additional residential properties will increase from 3% to 5%. For companies purchasing residential properties worth over £500,000, the rate will rise from 15% to 17%. These changes aim to target speculative investments while still incentivising primary homeownership.
From 1 April 2025, additional adjustments will take effect:
- Properties valued up to £125,000 will attract a 5% surcharge.
- Properties between £125,001 and £250,000 will incur a 7% surcharge.
- Higher value thresholds remain unchanged from the 31 October 2024 rates.
Navigating the ‘Additional Property’ Surcharge
Introduced in 2016, the SDLT surcharge applies to those purchasing additional properties beyond their primary residence. The recent changes increase the surcharge rate, making it more important than ever to understand the rules and plan your transactions strategically.
Replacing Your Main Residence
If you sell your primary residence and purchase a new one, the surcharge does not apply, provided the transactions align. However, if there is a delay in selling your old home, you must pay the surcharge upfront and reclaim it once the sale is completed (within three years).
Married Couples and Civil Partners
HMRC treats married couples and civil partners as a single entity when determining SDLT liability. If one partner owns a property, any additional property purchased by either partner attracts the surcharge. Careful planning is crucial in these scenarios, especially for couples blending property ownership at the start of their relationship.
Joint Ownership and Family Assistance
When purchasing property jointly, the surcharge applies if any buyer meets the conditions for additional property ownership. Parents assisting children in purchasing their first home, for example, could trigger the surcharge if they hold an ownership stake. Alternatives, such as gifting cash, may offer a solution but come with their own considerations.
First-Time Buyer Relief
First-time buyers benefit from relief on properties worth up to £625,000, paying no SDLT on the first £425,000 and only 5% on the remaining value. However, this relief is only available if all buyers qualify as first-time purchasers, highlighting the importance of structuring transactions carefully.
Considerations for Buy-to-Let Landlords
The increased surcharge applies universally to buy-to-let landlords. While some landlords may consider restructuring their portfolios into company ownership, this approach comes with its own tax complexities, such as restrictions on loan interest relief.
Planning Ahead
Despite the new challenges, strategic planning can help mitigate SDLT liabilities. Whether you are a landlord, a parent helping children onto the property ladder, or considering property portfolio restructuring, obtaining professional advice is essential.
At KPN, our experienced team can guide you through these changes and develop a tailored strategy to meet your needs. Contact us today to ensure your property transactions align with the latest regulations while achieving your financial goals.
This article provides general guidance and should not be considered as professional advice. Always consult a qualified advisor for your specific circumstances.