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Stamp Duty Land Tax Changes - Budget 2016

Stamp Duty Land Tax Changes - Budget 2016

Agribusiness solicitor Joanne McKenzie summarises the changes to the Stamp Duty Land Tax (SDLT) following this year's budget.

The Budget announced on the 16th March 2016 introduced a number of changes to the Stamp Duty Land Tax (SDLT) regime which will impact property sales and purchases.   

Higher Rates of SDLT on Purchases of Additional Residential Properties

With effect from the 1st April 2016, higher rates of SDLT on purchases of additional residential property above £40,000 have been introduced, such as on buy-to-let properties and second homes.

The higher rates are 3% above the previous SDLT rates as demonstrated in the table below.

Purchase Price or Value Former SDLT Rate New Higher Rate
Up to £40,000 0% 0%
Between £40,000 - £125,000 0% 3%*
Between £125,000 - £250,000 2% 5%
Between £250,000 - £925,000 5% 8%
Between £925,000 - £1,500,000 10% 13%
More than £1,500,000 12% 15%

* This rate will also be charged on the first £40,000 of consideration.

The higher rates will not apply to purchases of:

  • non-residential or mixed use properties such as a shop with a flat above or a farm;
  • transactions where the consideration is less than £40,000.
  • residential property where the individual sells their previous residence within three years of the effective date of the acquisition of the new residence (and meets certain other conditions) in which case the additional SDLT can be reclaimed.

New Stamp Duty Land Tax Rates for Commercial/Mixed Use Property Transactions

The SDLT regime for non-residential and mixed use property changed to a banding system on 17th March 2016.

From 17th March 2016, the SDLT rates will apply to the value of the property over each tax band, unlike the former regime where SDLT was charged at a single percentage of the purchase price of the property, depending on the rate band within which the purchase price fell.

The new rates are as follows: 

Band: Purchase Price £ Non-Residential
£0 - £150,000 0%
£150,001 - £250,000 2%
Over £250,000 5%

The new bands mean that buyers of commercial/mixed use property, including land and farms, worth up to £1.05 million will pay less in stamp duty than under the former SDLT regime.

About the author

Joanne McKenzie profile photo

Joanne McKenzie

Joanne is a Senior Associate in the firm's Agribusiness team.

Published: Thursday 12th May 2016
Categorised: Agribusiness

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