Changes to Stamp Duty Land Tax in the 2024 Budget
Chancellor Rachel Reeves has unveiled the first Budget of the Labour government. The Chancellor revealed that the rate of Stamp Duty Land Tax (SDLT) payable on the acquisition of additional dwellings (a second home) by individuals, or the purchase of dwellings by companies is to increase. These transactions will now be subject to an additional rate of 5% above the standard residential rates of SDLT, increasing from the previous surcharge of 3%.
What is a second property? A second property is a residential property purchased in addition to your main residence for individuals.
Also announced was the single rate of SDLT payable by certain companies and other non-natural persons purchasing residential property over £500,000, is to increase from 15% to 17%.
These new SDLT rates will apply to transactions with an effective date on or after 31st October 2024. What an effective date usually means is the point at which you complete the purchase. However this could be affected if this is unless there has been substantial performance of the contract before the date of actual completion. This may occur if any payments of rent or consideration are made, or if the buyer takes possession of the whole, or substantially the whole, property being sold.
First Time Buyer Relief
The Government have also confirmed the temporary rates for SDLT introduced by the “Temporary Relief Act” for first time buyers, introduced by the previous government in 2022, will end on 31st March 2025. Therefore from 31st March 2025 the rates will revert to the previous level being:
0% up to £125,000.00
2% above £125,000.00 and up to £250,000.00
5% above £250,000.00 and up to £925,000.00
10% above £925,000.00 and up to £1,500,000.00
12% above £1,500,000.00
First time buyers will be hit hard after 31 March 2025, with the upper price limit of £625,000 reverting to £500,000 and the maximum amount free of SDLT falling from £425,000 to £300,000.
The 2% surcharge for non-UK resident buyers, which the Labour manifesto had said would increase by 1%, remains unchanged. The 2% extra can apply on top of the 5% surcharge for “higher rates” transactions and on top of the 17% flat rate.
This may see a short-term boost to the residential property market in the run up to March 2025, however looking forward this may create a further challenges to those seeking to get onto the property ladder. We are here to assist you and please do get in touch if you need to complete before the end of March 2025 to benefit from the current reduced rates of SDLT.
The expected increase to CGT for residential property did not materialise in the budget, but investors were hit by a surprise hike in the second property Stamp Duty Land Tax (SDLT). CGT rates are linked to one’s personal income tax banding and subject to personal allowances and have remained unchanged for individuals. The current rates being 18% for standard-rate tax-payers and 24% for higher-rate taxpayers.
If you would like further information relating to this article please feel free to contact me by telephone on 020 8221 8011 or on email at tony.chauhan@bowlinglaw.co.uk or visit my profile here
This article is not legal advice; it is intended to provide information of general legal interest about current legal issues.
