As expected The Chancellor, George Osborne, has now confirmed that 3% stamp duty surcharge on the purchase of second homes and buy-to-let properties will go ahead from Aril the 1st 2016.
In a boost for first-time buyers, the Chancellor announced the introduction of a Lifetime ISA for under 40s. The government will save £1 for every £4 they put away.
So, what does this really mean we hear you ask.
Anyone who is buying additional residential properties, for example a holiday home or buy-to-let will be liable also.
The 3% tax also applies even if the home you already own (or part-own) is overseas. So, if you have a chalet in France and are buying your first home in the UK, you will have to pay this extra tax.
There has been discussion on avoiding the tax by setting up a limited company. The government has a keen eye on preventing tax avoidance with this this new charge so you won’t be able to escape it by setting up a limited company for the purpose of buying an additional home or homes. There is ongoing talks from the Treasury on how this will work for existing limited companies so the jury is still out on this point.
Our opinion is that The Chancellor’s decision to go ahead with plans to introduce an additional 3% increase in Stamp Duty on buy-to-let properties and second homes, is the latest in a series of short-sighted policies aimed at the property market.
It would seem to us that new The Stamp Duty will ultimately make renting more expensive – which in turn eats into people’s ability to save towards their deposit for buying a home.
Property Banding is as follows:
£0 – £125,000 3% Levy
125,000 to £250,000 5% Levy
£250,000 – £925,000 8% Levy