BUY TO LET STAMP DUTY INCREASE
Key points
- Buy to let investors and second homes will pay and additional 3% stamp duty over the standard rate
- The tax increase may not apply to large commercial landlords, although final details have not been announced
- How the buy to let stamp duty increase affects you
- Buy to let capital gains must now be paid after 30 days
- What to do if you are considering buy to let investment
About the stamp duty increase for buy to let investors
Stamp duty is a tax which applies to most property purchases in the UK. When you buy a property you pay tax on a sliding scale according to the purchase price. This tax was recently increased for larger property purchases.
From April 2016, buy to let investors or second home purchasers will have to pay an additional 3% over the current rate. Buy to let properties up to £40,000 value will pay no stamp duty, but for properties over £40,000 (nearly all), 3% stamp duty tax is applied to all the property value. Therefore, a property bought for £30,000 would be taxed at 0% stamp duty, but a £50,000 property would be taxed at 3% of the whole value, or £1,500.
This will affect you according to the table below.
Clearly, this is a massive blow for buy to let investors, plus those who buy second properties, and comes on top of further tax increases for buy to let, which come into force from 2017.
How this buy to let stamp duty change affects you
This is a massive tax increase, and may affect the viability of your rental property. See the table below to assess how your buy to let investment might be affected.
Buy to let capital gains
In a further change, buy to let investors must now pay capital gains tax after 30 days (from April 2019), rather than wait until the following January, as under the current rules. The one positive in all this is that when you sell a buy to let property you can offset your original purchase costs against your gains. Therefore, you can offset the stamp duty paid on your original purchase. Just bear in mind that this may be many years later.
What next if you are considering buy to let investment?
If you are considering buy to let investment, take a look at our article on investments vs buy to let. Even if you are not considering traditional investments, this article will highlight some of the major considerations before you buy a property.
Secure your future and live your dreams with Prosper.
An introduction to Financial Planning and Wealth Management
See how we help people in your situation Prosper...
The Personal Finance Portal
Get your free mini guide on How to Prosper from your High Income
This FREE Mini Guide is perfect for you if you want to manage your high income wisely, and ensure your financial future is secure so you can live the life you really desire.

Want your free mini guide?
Fill out the form below
Got a Question? Call 01206 919101
HIGH INCOME?
Find out how we can help you to Prosper from your high income.
PRUDENT SAVER?
Find out how we can help you to Prosper from your savings.

Do you require a simple system to achieve clarity in your finances?
Focus on the 7 most important figures necessary to create your own basic financial plan.
Discover a straightforward way to eliminate the clutter in your financial life to gain clarity on what is actually important with your money.

About Dan Woodruff
Certified Financial Planner & Chartered Wealth Manager at Woodruff Financial Planning
Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.