New Stamp Duty rates: will it cost you more to move?


New Stamp Duty rates: will it cost you more to move?

New Stamp Duty Land Tax (SDLT) rates came into law on the 1st April 2016. These changes to the law mean anyone buying a second home has to pay a higher amount in Land Tax.

While these changes are likely to affect buy-to-let landlords the most, they might end up costing you more if you move house.

Buying a new home before your old one has sold

These new SDLT rates mean anyone who buys more than one home will have to pay the higher rates of tax. However, there’s nothing to distinguish between landlords and regular homeowners that own more than one property. This is why you might end up paying more even if you’re not a buy-to-let landlord.  

Unfortunately, you will have to pay these higher rates if at any point you own more than one property. So, if you’re moving out and you have bought a new house before you’ve sold your old home, you will have to pay the higher SDLT rates. This is because you technically own two properties for a moment of time.

Below you can find the new rates alongside the old ones. 

Property value Old SDLT rates New SDLT rates
£0 - £125,000 0% 3%
£125,001 - £250,000 2% 5%
£250,001 - £925,000 5% 8%
£925,001 - £1.5 million 10% 13%
£1.5 million and above 12% 15%

These changes mean there is no tax-free threshold if you buy a second home, even if you’re in the process of selling your old one. You will still have to pay the higher rates, so it’s important to consider these costs if you’re thinking of moving out. Luckily, you may be able to apply for a refund if your home sells within a certain time period.

Apply for a refund

The government say those that own a second home temporarily can reclaim the difference between the old SDLT rates and the new ones. In short, if you are refunded, you should only end up paying the standard tax rates.

There are time restrictions on this refund though. You must sell your old home within 18 months of buying your new one in order to get your money back. If you don’t manage to sell your home in that time, you won’t be able to reclaim it.

So long as your old home sells within 18 months of the date you bought your new home, you will be able to get a refund. This means it shouldn’t really be a problem in the long-term, unless your old home is on the market for a very long time. But it’s worth remembering that you’ll have to budget for the new rates in the short-term if you buy your new home before your old one has sold.