In this week’s autumn statement, the chancellor announced higher rates of stamp duty land tax (SDLT) for purchases of additional residential properties, such as second homes and buy-to-let properties, coming into effect from 1 April 2016.

HMRC has confirmed to us that the changes will apply to all completions that take place on or after 1 April 2016, but contracts that have been entered into on or before 25 November 2015 will not be subject to the new rates, subject to normal rules about variation or assignment of these contracts.

We have asked HMRC to confirm what impact the 3% extra SDLT is likely to have on multiple-dwelling relief.

The higher rates will not affect transactions with a purchase price of up to £40,000 where a SDLT return is not required. The changes will also not apply to the purchase of a main residence or to corporates and funds making significant investments in residential property.

The higher rates will be an additional 3% to the existing SDLT rates. The current rates and new rates of SDLT for additional residential property purchases are:

BandExisting SDLT ratesNew additional SDLT rates
*£0 - £125k 0% 3%
£125k - £250k 2% 5%
£250k - £925k 5% 8%
£925k - £1.5m 10% 13%
£1.5m + 12% 15%

*Only applies to purchases over £40,000. For purchases at £40,000 or under no SDLT return is required.

There will be a consultation document issued soon.