Another change for Stamp Duty Land Tax – Autumn Budget 2024

Stamp Duty Land Tax (“SDLT”) is a tax paid by purchasers of land and buildings in England and Northern Ireland. In her first budget speech today, Rachel Reeves announced a 2% increase in SDLT for some transactions.

Current position for SDLT

An 3% surcharge rate applies where an individual purchaser already owns another residential property on the day of their purchase. These rates also apply to residential property purchased by companies and certain trusts, regardless of the number of properties they own.

In addition to second homes, a homeowner will pay SDLT based on the surcharge rates when they are replacing their main home but buy their new home first. They would pay the surcharge upfront, before reclaiming this.

For companies purchasing a residential dwelling valued at over £500,000, a Super Rate of 15% may apply to the entire consideration for the dwelling. Several reliefs are available, including for properties that will be used in a relevant trade or a property letting business.

Where the purchaser is non-UK resident, a separate 2% surcharge applies and this is unaffected by the Budget changes.

The main changes to SDLT

For transactions which have an effective date (normally completion) on 31 October 2024 onwards we will see two main changes. The exception being where contracts had been exchanged by 30 October, but which have not yet completed, subject to exclusions such if the contract is varied after that date.

First, the surcharge rate will increase to 5%.

The new rates, which progressively increase from 5% to 17%, are applied to bands of consideration for the purchase. For example, a UK resident purchaser of a second residential property would pay SDLT as follows:

Example property prices are the average of all dwellings in the region, based on ONS house price data released on 14 August 2024.

Second, the new Super Rate of 17% will apply to the entire consideration for the dwelling where the qualifying conditions are met. For example, a company purchaser of a residential property without relief from the Super Rate would pay SDLT as follows:

Given the prompt implementation of these changes, there is no opportunity for tax planning beforehand. However, the increased rates highlight the importance of verifying the correct SDLT treatment, considering questions such as:

• Is your new property residential or non-residential for SDLT purposes? The surcharge and super rate do not apply to non-residential property purchases.
• Is your interest in a property through a trust or inheritance counted as an additional dwelling?
• If you are also selling, or have sold, your main home, does your purchase meet the criteria for a replacement main home? If so, the surcharge rates do not apply.
• Is relief from the Super Rate available based on your company’s plans for the property?

The SDLT Advisory Team at Kreston Reeves can assist you by reviewing your purchase and identifying the appropriate tax treatment.

Watch our Autumn Budget 2024 question time webinar

Following the Autumn Budget 2024, our panel of experts examined the announcements made by The Chancellor, discussing what these changes mean for you. They also answered questions from our live audience. This webinar is now available to watch on demand here.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.