Stamp Duty changes- in practice

The changes to stamp duty on 1 April 2016 were much advertised in the press at the time when they were coming in to force but there is still some confusion as to how they work in practice.

If you are considering purchasing a property and need advice about stamp duty, then we would recommend you contact us to seek further advice, however a brief explanation of how the changes work is below:

1. An additional 3% of stamp duty will apply on the purchase of a residential property (freehold (not subject to a lease) or a leasehold property with a lease of more than 7 years) by an individual who:

i. Is paying more than £40,000.00 for the property;
ii. Owns an interest in another property worth £40,000.00 or more in another dwelling; and
iii. Isn’t replacing their only or main residence

2. So in practice this means that there are two situations where the additional 3% stamp duty won’t be payable:  

i. An individual who doesn’t own any interest in any other property except the one being purchased
ii. An individual who is replacing their main residence

3. You may be able to claim back the additional stamp duty paid if you do not sell your main residence at the time of the transaction, but do sell it within 3 years. This refund must be claimed within 3 months of the date of completion of the sale.

4. Married couples or civil partners who live in separate homes will not be able to replace either of their homes without paying the additional 3%.

This explanation is not comprehensive, but does give a brief description of how the new system works in practice. For more information, please contact the writer Sara-Jane Newell or one of the other members of our residential property team on 01952 810307 in our Newport office or alternatively by email on sara-janen@terry-jones.co.uk


 

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