By Isle of Wight Observer
In last year’s Autumn Budget, the Chancellor of the Exchequer, Rachel Reeves, enacted a significant increase in SDLT.
The surcharge for purchasing additional properties (such as second homes or buy-to-let) rose from 3% to 5%, effective immediately, and for companies buying residential property over £500,000, a super rate of 17% now applies, up from 15%.
Simultaneously, stamp-duty relief thresholds were rolled back with the nil-rate SDLT band for most purchasers returning to £125,000 from April this year and, for first-time buyers, the threshold reduced to £300,000 (previously £425,000).
As these reductions directly increase the SDLT payable for many homebuyers, the effects are already rippling through the property market. Research reveals that 35% of upsizers plan to delay moving until at least 2026, citing increased SDLT as a key obstacle. With fewer upsizers moving on, a cascading impact occurs, fewer first-time properties become available, limiting opportunities for new buyers and potentially constraining housing supply.
Beyond these implemented changes, recent speculation suggests a radical overhaul is under consideration. The Chancellor may replace SDLT with a progressive property tax on sales, levied at 0.54% on homes between £500,000 and £1 million, and 0.81% on higher-value properties, and this applies to sellers, not buyers. Alongside, a reform of council tax, potentially into a local property tax tied to updated valuations, is also under review.
It seems that, looking forwards, expert advice and timing will play an important factor in ensuring transactions are structured in the most tax efficient manner. Therefore, we are often advising clients to ensure they have a trusted Accountant or Tax Specialist on hand to provide detailed advice on the complexities of tax legislation where required.
If you would like Biscoes to assist with your residential property needs, please contact a member of our Residential Property team on 01983 533938.