What has changed?
Chancellor Rachel Reeves delivered the first formal budget on behalf of the new Labour Government on the 30th October 2024 and announced that as of the 31st October 2024 there will be a change in the Higher rate of Stamp Duty Land Tax payable, increasing the higher rate by a further 2%.
Before the rate increase:
An additional 3% applies on top of Stamp Duty Land Tax residential rates if buying a new residential property means you’ll own more than one.
The 3% additional rate applied to purchases which completed on or after 1 April 2016 to 30 October 2024.
From 31st October 2024 – the rate increase:
The 3% additional rate is increased to 5% on 31 October 2024.
If exchange of contracts took place before 31st October 2024:
Where contracts have been exchanged before 31 October 2024 but complete on or after the 31 October 2024 the additional rate of 3% will apply instead of 5%.
The new higher rates from 31 October 2024 to 31 March 2025 (These rates will change again on 1st April 2026)
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | 5% |
| The next £675,000 (the portion from £250,001 to £925,000) | 10% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 15% |
| The remaining amount (the portion above £1.5 million) | 17% |
Why the sudden change?
Chancellor Rachel Reeves announced a £40 billion package of tax increases to fund the NHS and public services in Labour’s first budget for 14 years.
I am currently purchasing a property; what does this mean for me?
If you are purchasing a buy to let property or a second home or interest in a residential property then you will be liable to pay the increase in Stamp Duty Land Tax when you complete, unless you exchanged contracts before the 31st October 2024.
What should I do if I have not exchanged contracts before the 31st October 2024 and can no longer afford the property due to the increase in Stamp Duty Land Tax?
You will need to withdraw from the transaction if you do not have funds to complete. You would then be responsible for payment of any solicitors’ fees incurred plus any disbursements paid out.
What should I do if I have not exchanged contracts before the 31st October 2024 and my buyer withdraws from the transaction due to the increase in Stamp Duty Land Tax?
If the buyer withdraws then you would be responsible for payment of any solicitors’ fees incurred plus any disbursements paid out. You could also consider renegotiating the sale price or you could remarket the property.
Tax Advice
Please note, if you are buying a property or an interest in property that is not your principal residence there are also other tax considerations to consider. Capital Gains Tax is payable when you come to sell the second property if the value of the property has increased. For buy to let properties there is also Income Tax considerations, payable on any profit from the rent. You may also need to consider Inheritance Tax and the impact of owning an additional property on your estate in the event of death. Buyers of additional homes, buy to let properties or additional interests in property should seek tax and wealth planning advice from their financial adviser or accountant in this regard.
How can Ellisons help?
For most people, buying or selling property will be the largest financial transaction they will ever make, so it is important to get it right! Our Conveyancing teams in Essex and Suffolk offer a wealth of experience and expertise in all aspects of residential property work.
Contact the Ellisons’ Residential Conveyancing team today on 01206 764477 or email us at enquiries@ellisonssolicitors.com.
