Landlords Wanted
The reforms of structure, rates and threshold for SDLT for residential property transactions are detailed below:
Each new SDLT rate will only be payable on the portion of the property value which falls within each band (rather than tax being due at one rate on the entire property value).
Transitional rules apply where contracts are exchanged before 4 December but the transaction completes on or after that date. In that situation, buyers will be able to pay SDLT under the old rules or the new rules, whichever is more beneficial for them.
Key points:
•This is a move from a “slab” to a “slice” system.
•Changes take effect for transactions completing on or after 4 December 2014 (with transitional rules for those who exchanged contracts before that date)
•The reform affects residential property transactions only. Commercial property transactions are unaffected
•SDLT will be cut for 98% of people who pay it and everyone buying a house for up to £937,500 will pay less or the same SDLT as under the current system.
•The new rates will apply to homes purchased in Scotland until 31 March 2015. After this date the Land and Buildings Transaction Tax (LBTT) replaces SDLT in Scotland.
Under the new rules, tax will be charged at a marginal rate on each slice of the consideration for a transaction:
•0% on any amount up to £125,000
•2% on any amount over £125,000 up to £250,000
•5% on any amount over £250,000 up to £925,000
•10% on any amount over £925,000 up to £1,500,000
•12% on any amount over £1,500,000
Anyone who exchanged contracts before 4 December (and completes on or after that date) can choose whether to use the old or the new rules simply by entering the appropriate amount of tax on their land transaction return.