Unwitting second-time buyers have been one of the hardest hit by the additional 3% Stamp Duty Land Tax (SDLT) surcharge, which came into force in April 2016. This is because the charge applies if an individual or their spouse already owns directly or indirectly, a residential property, including in a foreign jurisdiction, and wishes to buy a property in the UK.
Caught by surprise
Many people are still reportedly unaware of the charge, particularly those who own property abroad but are buying property
for the first time in the UK or those who are married to a person who does. If an individual or their spouse own any property personally, in a company of which they are a shareholder or in a trust which they have the benefit of, which can be situated anywhere in the world and is worth more than £40,000, they will be liable to pay the additional SDLT. This can result in paying a significant additional amount of tax. This rule also applies if you own a share of a property, and that share is worth £40,000 or more.
Not all bad news
The good news is that if a person buys and sells their main residence on the same day then they will not have to pay the additional SDLT regardless of any other property they own - this means people who already have additional properties are not penalised when buying and selling their main residence. If a person buys a new main residence but doesn’t sell their existing main residence on the same day, they will have three years from the date of completion of the purchase to claim a refund from the Inland Revenue on the extra tax paid.