Property tax attacks
In the Autumn Statement, the Chancellor announced further changes to the taxation of residential property. This is in addition to the restriction of allowable mortgage interest payments announced in the summer.
The current changes relate to Stamp Duty Land Tax (SDLT) and introduce a 3% surcharge for additional residential properties. This includes buy to lets, holiday homes or “pied a terre’s”.
The new SDLT rates for second or buy-to-let properties are likely to be:
Purchase price (£)
Up to 40,000
40,001 – 125,000
125,001 – 250,000
250,001 – 925,000
925,001 – 1,500,000
This means that if you are buying a holiday home for, say, £350,000, until April you will pay SDLT of £7,500. After April, you will pay £16,800, more than double the tax!
These changes only affect residential property, commercial property has again been ignored in the tax changes. This means there is no restriction for interest relief for commercial letting, maximum stamp duty rates of 4%, and international investors can obtain additional tax advantages.
We are yet to see the detail of these changes, and the devil is always in the detail!