HomeOwners Alliance logo

Become a member today to access our home helpline, discounted conveyancing, expert advice & legal service

Stamp Duty Surcharge – your questions answered

The 2016 Budget confirmed that the proposed 3% stamp duty surcharge will be going ahead. We've had lots of questions from concerned members about the new policy. Here are some answers.

March 18, 2016

What is the stamp duty surcharge?

It’s an additional 3% charge on existing rates, which can be seen in the table below

 

stamp duty surcharge

When does it start?

The policy was announced in the Autumn Statement 2015 and was under consultation until February 2016. The surcharge will take effect on 1st April 2016.

If you’re in the process of buying and want to avoid the extra charges, you must complete (not just exchange) before midnight on 31st March 2016.

If contracts were exchanged on or before 25 November 2015 and the purchase completes on or after 1 April 2016, the higher rates will not apply.

Will I have to pay it?

If you’re buying an additional property to your main residence (a holiday home or buy-to-let investment, for example), you will have to pay the additional stamp duty.  See what to consider for buy-to-let purchases and buy-to-let mortgages.

It will also apply if the property you already own is overseas – even if you regard it as a holiday home.

How much will it be?

The additional 3% stamp duty will apply to the entire purchase of the property, in addition to the regular stamp duty bill. So you need to add an extra 3% on top of the stamp duty you may already have had to pay.

Use our free stamp duty calculator to find out how much you would usually pay.  You will then need to add 3% of the purchase price to the figure to see how much you will need to pay.

What if the home I’m buying is my main residence or I don’t sell my previous home straight away?

If the home you are buying is replacing your main residence, then the additional 3% stamp duty will not apply.

However, if you move out of your main residence but keep it and buy another main residence, you will have to pay the 3% stamp duty surcharge initially.

If you sell the first home within 3 years of completing on the purchase of the new home, HMRC will make a full refund.  But you need to pay the 3% surcharge upfront and on completion.

What if I’m buying with a partner who already owns a home but I don’t?

Unfortunately, even if only one of you owns a home, you will still need to pay the extra 3% on a second property.

What if my partner and I are separated?

The government will consider married couples who are separated and living in circumstances that are likely to become permanent, as divorced for the purposes of applying the higher rates.

What if I inherit my home?

Stamp duty does not apply to inherited homes. However, if you then go on to buy a second property without selling the inherited property first, you will have to pay the additional stamp duty.

Is there any way I can avoid the surcharge?

Omitting information about the property you own to your solicitor is fraud and could result in penalties a lot worse than the additional stamp duty charges.

All major property investors will be liable to pay the surcharge, too.

You won’t have to pay the additional stamp duty on homes worth less than £40,000, or on caravans, mobile homes or houseboats.

Our view

Doing away with the exemption for investors with larger property portfolios is fairer and should raise more money which can be ploughed back into housing to help struggling families and the next generation.

The stamp duty surcharge should be a great lever to help those wanting to buy a home to live in. But the government hasn’t listened to the concerns of both existing and aspiring home owners and are pushing ahead with introducing an overly complicated system that could harm the very homeowners they are trying to help.

Homeowners will have now 3 years instead of 18 months in the initial proposal to claim back the surcharge if they sell their original home. But it is crazy for the government to insist that the 3% extra is paid upfront. This will hit those thinking of downsizing as they will need to find additional thousands of pounds to complete their move.

We don’t understand why the government is making a hash of implementing these changes for what is otherwise a popular policy. Buying and selling property is messy, costly and can take ages – the way the government is introducing this stamp duty reform will just make things worse.

 


Leave a comment




* required

14 Comments

  1. Hi Trish, there are certain tests to be met to work out if the stamp duty can be reclaimed. Their conveyancer is best placed to work this out for them.

    Comment by Sara Hind — November 19, 2018 @ 4:09 pm

  2. My son & his wife bought a house in Sheffield in 2007 & in 2013 they went to work abroad & so let the house. They returned last year to jobs in Southampton & so have not lived in the Sheffield house since 2013.The Sheffield house is on the market & they are buying a house in Southampton which looks as if it will complete before the Sheffield house is sold. We know they will have to pay higher rate stamp duty on the new purchase but will they be able to claim it back when the Sheffield house is sold even though they haven’t lived in it for the last three years?

    Comment by Trish — November 7, 2018 @ 5:02 pm

  3. Hi Lorrianne, thanks for getting in touch with your question. We don’t have quite enough information to answer it. Do consider becoming a member, we’d be happy to help. In the meantime, you may wish to call the HMRC stamp duty land tax helpline for help with your query. They can be contacted on 0300 200 3510.

    Comment by Sara Hind — October 17, 2018 @ 1:13 pm

  4. Hi Stephen. Yes as you already own another property. What does the estate agent say about selling your original property? If you want to speak to us about what to do please consider joining us so we can talk through how to avoid you paying out the tax again and expedite the sale of your original home. Take a look at https://hoa.org.uk/join-us/ This guide may also be informative: https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/why-isnt-my-house-selling/

    Comment by AKerr — October 12, 2018 @ 2:03 pm

  5. Hello 2 years ago I moved out of my main residence into another which has incurred the 3% surcharge. I have had the previous property on the market since I have moved out however I am struggling to sell it due to its location. I am looking at moving again will I have to pay the 3% surcharge again as I still have the original property.

    Comment by Stephen — October 11, 2018 @ 2:15 pm

  6. Hi I am selling my home and buying another one at the same time. I also own another property. Will I be charged the higher rate stamp duty

    Comment by Lorraine — October 4, 2018 @ 6:07 pm

  7. Hi Mark, are you asking if you’ll be considered a first time buyer for Stamp Duty relief? If you own the property that you rent out, then you would not be considered a first time buyer for stamp duty purposes.

    Comment by Sara Hind — September 24, 2018 @ 4:18 pm

  8. In the armed forces and have rented my first property out for 7 years which I also pay service charge and ground rent on. I will never move back into this property. If i buy a new house to live in when leave army will I have to pay the 3% stamp duty?

    Comment by Mark Radcliffe — September 23, 2018 @ 10:11 pm

  9. Dear Dave,

    Do consider becoming a member and we’d be happy to assist you further, your membership entitles you to one free call to a legal advisor per year and we can put you in touch with a tax specialist lawyer.

    many thanks,

    Sophie
    HomeOwners Alliance

    Comment by Sophie Khan — June 7, 2017 @ 2:52 pm

  10. I have divorced my ex wife but am stuck on the mortgage, I have divorce papers to say I have no entitlement to the old family home so my question is – if I buy a new house with my new partner will it be classed as a second home as i’m on old family home mortgage ? (like I said i have divorce papers saying I have no claim to it)

    Comment by dave — June 7, 2017 @ 1:55 pm

  11. Hello. My girlfriend and I both own flats (one each). My girlfriend is moving into my flat, and will be renting hers (after changing it to a buy-to-let). My flat will then become the ‘main residence’ for both of us. At some point in the near future, I will sell my flat, in order to buy a new home for the both of us. My girlfriend will still own her old flat, which will be rented. Will we have to pay the surcharge stamp duty?

    Comment by Adam — May 25, 2017 @ 5:45 pm

  12. I own my own house and have lived in it for 20 years. I also own a property which I let out. I intend to sell my main house and purchase another to live in – am I correct in assuming that the additional property stamp duty surcharge will not apply.

    Comment by susan — February 8, 2017 @ 4:54 pm

  13. I own my own home soley in my name. My boyfriend recently moved in after the sale of his home. He is now purchasing a new home solely in his name. I am looking at renting my house out and moving in with my boyfriend it his new house. Does he still have to pay the higher rate stamp duty on his new purchase?

    Comment by Nicola — January 17, 2017 @ 2:14 pm

  14. Hi, I have recently sold my property and am about to purchase a new one. I own a property abroad, which I inherited from my parents several years ago – which I co-own with my sister -and which I have kept vacant so as to be able to sell it more quickly when I need help to repay my mortgage. Do I need to pay the extra 3% on the stamp duty?
    Thanks

    Comment by James — April 24, 2016 @ 11:35 am

Become a member today

Become a member of the HomeOwners Alliance:

 

✓ To Ask an Expert
✓ Access our Home Helpline
✓ Free Legal Advice Line
✓ Fee free mortgage advice
✓ Discounted conveyancing
✓ Unbiased advice

Join today >

Buying a home? We’re here to help! 

property apps

✓ First time buyer?

✓ Need advice on estate agents?

✓ Stressed about moving?

 

We can help you through the key stages of buying a home

Read our step-by-step guide >

Latest Tweets

  • HomeOwners Alliance
    Exchanging contracts is exciting but can also be tricky. We take a look at how to exchange contracts, what you shou… https://t.co/2FarLe7Bsq

    14 December 2018

  • HomeOwners Alliance
    We know how tricky finding a good removal company is. This guide helps you to find the right removals company for y… https://t.co/V43PWTDdo9

    14 December 2018

  • Follow us on Twitter >

     

Looking for fee free mortgage advice?

We’ve teamed up with the UK’s leading fee-free mortgage broker to provide you with expert advice.✓ UK’s leading fee free mortgage broker

✓ Compare 1000s of mortgages

✓ Fully qualified advisers

✓ Winner 2017 What Mortgage Awards

Find out more >