Changes to Stamp Duty Tax announced in George Osbourne’s Autumn statement are set to take effect in April of this year. The changes entail a 3% surcharge on each Stamp Duty band.
The increase in costs is intended to raise 1bn for the UK treasury in a bid to cut the deficit. Landlords feel aggrieved however by the hike in tax, claiming that it will diminish the amount of buy to let properties all together.
The changes to the tax will have a significant impact when implemented, considering there is a 3% rise.
Where as before if a property was worth between £125,000 and £250,000, the stamp duty charge was 2%, but now buy-to-let landlords will now pay 5%. It is estimated that the average buy-to-let property in England and Wales is worth 184,000. As of April 2016, landlords purchasing a property at this price will pay an extra £5,520
Commercial property investors, with more than 15 properties, are expected to be exempt from the new charges.
Stamp Duty Rates (on purchases)
Property value Standard rate Buy-to-let/second home rate (April 2016)
Up to £125,000 0% 3%
£125 – £250,000 2% 5%
£250 – £925,000 5% 8%
£925 – £1.5m 10% 13%
over £1.5m 12% 15%
Buy-to-let landlords will also be hit by a change to Capital Gains Tax (CGT) rules. Instead of paying CGT at the end of the year, as of April 2019, it will be due within 30 days of a property being sold.
Even more doom and gloom for landlords comes in the form of the ungenerous tax relief on mortgage payments of just 20%, promised by Osbourne to take effect in 2017.
Criticism has been directed at the Chancellor from all angles, by landlords and industry insiders who firmly believe that Osbourne is trying to obliterate the buy to let market, in favour of increasing the supply of properties, in a bid to create more home ownership.
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