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Stamp Duty Land Tax for Landlords

Stamp Duty Land Tax for Landlords

Current Rates of Stamp Duty for Landlords
Purchase Price SDLT payable
Up to 40,000 0% on any sum UNDER 40,000
40,000 - 125,000 3% on whole sum
Next 125,000 5% on portion between 125,001 - 250,000
Next 675,000 8% on portion between 250,001 - 925,000
Next 575,000 15% on portion between 925,001 - 1.5 million
Anything above 1.5 million 15%

As you can see from the table above, Stamp Duty Land Tax has become a major concern for landlords, particularly since Osborne's outrageous decision to penalise small residential landlords - before he was happily sacked.

Since April 2016 all purchases of buy-to-let property have incurred an EXTRA 3% premium. This was announced as a way of helping first time buyers but was in my opinion merely a way of helping major City institutions to get a piece of the buy to let pie. This is because different rules apply to corporate bodies and more importantly much less tax is payable on a simultaneous purchase of six or more properties.

Slicing not Slabbing

The one sensible change that Osborne did was to do away with the 'all or nothing' slabbing effect of Stamp Duty. In other words, now you only pay the next level of tax on only the amount by which your purchase price EXCEEDS that level and not only the WHOLE amount as previously.

Example
A buy-to-let landlord buys a property for 350,000. Thus the tax he or she pays is as follows:
40,000 - 125,000 the tax is 2550 (3%)
125001 - 250,000 the tax is 6250 (5%)
250,001 - 350,000 the tax is 8000 (8%)
Thus the TOTAL SDLT this landlord has to pay amounts to a massive 16,800

Stamp Duty on 6 or more properties* purchased simultaneously
Purchase Price SDLT payable
Up to 150,000 0%
151,000 - 250,000 2%
251,000 and above 5%

Now look at the table above! Simultaneous purchases of six or more residential properties are now considered to be Non-Residential for SDLT purposes. This is of course great news for City institutions and very rich individuals. For confirmation just check the government website.

Thus if the purchase of the 350,000 property formed part of a simultaneous purchase of six or more properties each costing 350,000, the SDLT would only be 7,000 per property.

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