Stamp Duty Land Tax — increase to the higher rates on additional dwellings and to the single rate of tax on purchases by non-natural persons
Published 30 October 2024
Applies to England and Northern Ireland
© Crown copyright 2024
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Who is likely to be affected
Individuals purchasing additional residential property such as second homes or buy-to-let properties in England and Northern Ireland, companies and other non-natural persons purchasing residential property in England and Northern Ireland, and conveyancers and other professionals who advise on such transactions.
General description of the measure
This measure increases the higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties by individuals and purchases of residential properties by companies from 3 to 5 percentage points above the standard residential rates of SDLT.
The measure also increases the single rate of SDLT payable by companies and other non-natural persons when purchasing residential properties worth more than £500,000, from 15% to 17%.
Policy objective
Increasing the higher rates of SDLT on purchases of residential property is expected to disincentivise the acquisition of second homes and buy-to-let properties, freeing up housing stock for main home and first-time buyers.
The measure will also ensure companies and other non-natural persons buying dwellings for more than £500,000 which are not intended to be used for a commercial purpose pay the highest rate of SDLT.
Background to the measure
The measure was announced at Autumn Budget 2024.
Detailed proposal
Operative date
This measure applies to transactions with an effective date (usually the date of completion) on or after 31 October 2024.
Where contracts are exchanged prior to 31 October 2024 but complete or are substantially performed on or after that date, transitional rules may apply.
This measure does not apply to Scotland or Wales where devolved land transaction taxes apply.
Current law
The main SDLT legislation is contained in Part 4 of the Finance Act (FA) 2003.
Higher rates of SDLT for purchases of additional residential property by individuals and companies
Section 55 of FA 2003 sets out the amounts of tax chargeable on a land transaction. Where a purchaser is liable to pay the higher rates of SDLT under Schedule 4ZA FA 2003, section 55(4A) provides that the transaction is liable to the rates of tax as set out in paragraph 1(2) of Schedule 4ZA FA 2003.
For transactions with an effective date between 23 September 2022 and 31 March 2025, those rates are as follows:
| Relevant consideration | Percentage |
|---|---|
| So much as does not exceed £250,000 | 3% |
| So much as exceeds £250,000 but does not exceed £925,000 | 8% |
| So much as exceeds £925,000 but does not exceed £1.5 million | 13% |
| The remainder (if any) | 15% |
For transactions with an effective date on or after 1 April 2025 those rates are as follows:
| Relevant consideration | Percentage |
|---|---|
| So much as does not exceed £125,000 | 3% |
| So much as exceeds £125,000 but does not exceed £250,000 | 5% |
| So much as exceeds £250,000 but does not exceed £925,000 | 8% |
| So much as exceeds £925,000 but does not exceed £1.5 million | 13% |
| The remainder (if any) | 15% |
Single rate of SDLT payable by companies and non-natural persons on purchases of dwellings for more than £500,000
Schedule 4A of FA 2003 provides for a single rate of SDLT to be charged on acquisitions of a ‘higher threshold interest’ by companies and other non-natural persons. A higher threshold interest is an interest in a single dwelling for which chargeable consideration of more than £500,000 is given (or is one of a number of interests in a single dwelling acquired in linked transactions, the aggregate chargeable consideration for which exceeds £500,000). Paragraph 3(1)(a) of Schedule 4A FA 2003 sets the higher rate charge at 15%.
Where the acquisition of a higher threshold interest is made in consequence of the exercise of collective rights by the tenants of flats, special rules under section 74 FA 2003 apply to determine the amount of tax chargeable on the transaction. Under section 74(1A) FA 2003, the rate of tax chargeable is set as 15% of the chargeable consideration for the transaction.
Proposed revisions
Higher rates of SDLT for purchases of additional residential property by individuals and companies
Legislation will be introduced in Finance Bill 2024-25 to amend Table A at paragraph 1(2) of Schedule 4ZA FA 2003 increasing the rate of tax payable.
For transactions with an effective date between 31 October 2024 and 31 March 2025, the rates are as follows:
| Relevant consideration | Percentage |
|---|---|
| So much as does not exceed £250,000 | 5% |
| So much as exceeds £250,000 but does not exceed £925,000 | 10% |
| So much as exceeds £925,000 but does not exceed £1.5 million | 15% |
| The remainder (if any) | 17% |
For transactions with an effective date on or after 1 April 2025 those rates are as follows:
| Relevant consideration | Percentage |
|---|---|
| So much as does not exceed £125,000 | 5% |
| So much as exceeds £125,000 but does not exceed £250,000 | 7% |
| So much as exceeds £250,000 but does not exceed £925,000 | 10% |
| So much as exceeds £925,000 but does not exceed £1.5 million | 15% |
| The remainder (if any) | 17% |
Single rate of SDLT payable by companies and non-natural persons on purchases of dwellings for more than £500,000
Legislation will be introduced in Finance Bill 2024-25 to amend section 74(1A) and paragraph 3(1)(a) of Schedule 4A FA 2003 to increase the single SDLT rate of charge for acquisitions of higher threshold interests by companies and non-natural persons from 15% to 17%.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| +115 | +90 | +170 | + 255 | + 280 | + 310 |
These figures are set out in table 5.1 of Autumn Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2024.
Economic impact
This measure is not expected to have any significant macroeconomic impacts, beyond the behavioural responses estimated in the costing.
The costing accounts for a behavioural response, including impacts on residential property transactions liable to the higher rates and the single rate for corporate bodies, and on residential property prices. The costing assumes that a proportion of the disincentivised higher rates transactions will be displaced by primary residence transactions.
Impact on individuals, households and families
The changes are expected to have an impact on individuals who are purchasing additional residential property such as second homes and buy-to-let properties. This will make purchases of properties that are subject to higher rates of SDLT more expensive.
The measure is not expected to impact on family formation, stability or breakdown.
Customer experience is expected to remain broadly the same as it does not change how individuals interact with HMRC.
Equalities impacts
The measure will make the acquisition of residential property more expensive for purchasers of additional dwellings, such as second homes and buy-to-lets, and therefore provide a greater advantage for main home and first-time buyers. This impact is expected to be in line with the existing distribution of home ownership among this type of purchaser.
The measure is not expected to impact on this distribution for any protected group.
The increase in the single SDLT rate for acquisitions of higher threshold interests by companies and non-natural persons is not expected to have an impact for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This change is expected to have a negligible impact on businesses associated with the property and conveyancing industry.
One-off costs will include familiarisation with the changes and could also include making minor IT and software changes to take account of the changes. There are not expected to be any continuing costs.
This change is expected to affect businesses (such as buy-to-let landlords) as it will make the cost of purchasing residential property more expensive.
This measure is not expected to impact civil society organisations.
Customer experience is expected to remain broadly the same as the measure does not alter existing processes.
Operational impact (£ million) (HMRC or other)
HMRC will need to make changes to its IT systems and to the online calculator on GOV.UK to support the changes. These are estimated to cost up to £100,000.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from SDLT returns.
Further advice
If you have any questions about this change, contact the HMRC SDLT Helpline by telephone: 0300 200 3510 (from abroad +44 1726 209 042).