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Foreign investors looking to purchase residential properties in the UK may have to pay an additional 1% stamp duty surcharge, according to a recent announcement by the government. Meanwhile, the Autumn Budget also introduced an extension to first-time buyers relief in England and Northern Ireland. This blog post examines the latest situation in regard to Stamp Duty Land Tax (SDLT).

The current rules

When a person buys a residential property in England and Northern Ireland, regardless of whether they are from the UK or abroad, if the value of the property is above £125,000 SDLT will need to be paid, at the rates listed below:

Property value

Rate (on portion above threshold)

£0 to £125,000

0%

£125,000 to £250,000

2%

£250,000 to £925,000

5%

£925,000 to £1.5 million

10%

Over £1.5 million

12%

 

 

 

 

 

 

 

 

 

If a second property is being purchased, then an additional surcharge on the property will apply to both international and national investors. The additional surcharge, which was introduced in April 2016, ranges from 3% to 15%, as shown in the table below:

Property value

Rate (on portion above threshold)

£0 to £125,000

3%

£125,000 to £250,000

5%

£250,000 to £925,000

8%

£925,000 to £1.5 million

13%

Over £1.5 million

15%

 

 

 

 

 

 

 

 

 

If, however, the person purchasing a residential property is a first-time buyer and the property is worth £500,000 or less, then relief from paying SDLT will be available, as shown in the table below:

Property value

Rate (on portion above threshold)

£0 to £300,000

0%

£300,000 to £500,000

5%

£500,000 plus

Standard rates apply

 

 

 

 

 

 

Extension to first-time buyers’ relief

The 2018 Budget announced an extension to first-time buyers' relief in England and Northern Ireland, so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. This change applies to relevant transactions with an effective date on or after 29 October 2018, and is backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyers relief can amend their return to claim a refund.

The new surcharge for overseas buyers

The plan to introduce an additional stamp duty surcharge for non-residents was first announced by Prime Minister Theresa May, and was confirmed in the 2018 Autumn Budget.

With the introduction of the new surcharge, the government expects to raise up to £120 million, which it plans to use to ‘tackle homelessness, the housing crisis and inequalities associated with home ownership’.

A consultation on the plans will be launched in January 2019.