In 2016 - 17, the Telegraph newspaper reported, HMRC collected a whopping £8.6 Billion from UK taxpayers through Stamp Duty Land Tax. Commonly known as Stamp Duty, the tax is paid by the buyer of a new home or commercial property or the lessee of certain leasehold properties.

More recently, the UK government introduced a relatively complex scale of tax bands aimed in large part at discouraging the purchase of second homes and property used for buy-to-let investment. Part of these tax measures included the increase in the basic rate of stamp duty for the purchase of a second home, from 1% to 3%. In 2016-17 the government raised £1.7 Billion in revenue from this increase.

Stamp Duty Changes for Buy to Let Landlords

Of course, as is frequently the case with tax laws in the UK, making provision for the inevitable exceptions to the rule simply makes things more complicated. For example, last year over 10,700 transactions where stamp duty was paid on the increased basis were eventually refunded simply because a homeowner bought another home which they intended to be their main residence, but they bought it before they had sold their first home.

In this case, the rules allow for an exemption, which seems equitable, except that it requires that the homeowner pays the full stamp duty on their new home at the punitive rate of 3% anyway. They may claim back the additional element of the tax charge if they subsequently sell their other home within three years but that means carrying a significant tax burden and negative cash flow until that time.

One thing is apparent. Your home is now a political pawn in a much bigger game and understanding how best to fund its purchase is more important now than ever.

 

Download our Free First Time Buyers Guide

Recent posts

If you are looking at remortgaging your property but you are unsure whether it’s the right decision, we have listed five reasons why it might be for you.

As the cost-of-living crisis continues, many people across the UK are struggling financially, many of whom are finding it hard to get debt-free.

According to research by StepChange, there are five common reasons people don’t seek help and advice with debt concerns.

Friyay Rate Reviews

6 Feb 2024

Every Friday our experts search the market for the latest rates from every lender saving our clients some serious £'s!

Looking to Extend?

2 Feb 2024

Are you looking to extend your property? There are many benefits to adding an extension to your existing home, here are a few. 

Put simply, Equity Release is where you can release equity (money) tied up in your home for any purpose you like. In this short article, we share some reasons why you may want to consider Equity Release.

The team at Mortgage Required may not be able to lower the prices in your local supermarket, but we have come up with a list of tips to help you lower your food shopping bill.

Every year Big Energy Saving Week takes place to raise awareness about energy efficiency, reducing energy bills, and combating fuel poverty. Below are some ways you can get involved and hopefully make a saving!

In this blog we look at what happened in the housing market in relation to house prices last year, and look ahead at the forecast for 2024.