In recent years, the UK Government has made changes to Stamp Duty Land Tax (SDLT) to replace the outdated "slab" structure in favour of a more "progressive" structure.
A further change took effect on 01 April 2016, with the introduction of a higher rate of SDLT for buyers who already own a property.
The basic rate applies if, at the end of the day of the transaction, an individual owns only one residential property, irrespective of the intended use of the property.
If, at the end of the day of the transaction, an individual purchaser owns two or more residential properties, whether the purchaser pays the higher rates or not will depend on whether they are replacing their main residence.
If the purchaser has sold a previous main residence within 18 months before the day of the transaction and the transaction is a purchase of a new main residence, the purchaser will be considered to be replacing a main residence. Where an individual is replacing a main residence, the higher rates of SDLT will not apply.
However, if the purchaser is not replacing a main residence (either because they have not sold a previous main residence within the last 18 months or the property being acquired is not a new main residence), the higher rates will apply.
Recognising that there may be certain circumstances where purchasers may end up in difficult circumstances, some purchasers will be eligible for a refund of the additional SDLT paid.
For further details, please visit the HMRC website here.