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Stamp duty could change in 2022 – London and country homeowners worst affected

Posted 26th January 2022 by sdlt-admin

We are proud to share that our recent Youtube video sparked conversation in the mainstream media!

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“Stamp Duty remains a “hot topic” as experts speculate over potential changes to the property tax. Now, a finance expert has shared the proposed changes that could take place this year.

The UK property market experienced a huge spike of activity last year with house price growth showing an annual rise of 11.8 percent. There were a plethora of aspects that contributed to the property market boom in 2021. Some experts suggest more buyers were looking to move out of city locations to more rural spots like market towns and villages.

The coronavirus pandemic and lockdowns also saw homeowners evaluate their living situation and make the move based on their new priorities, whether that’s an extra room for working from home or more outdoor space.

However, one of the biggest contributions to last year’s property market boom was the stamp duty holiday.

The stamp duty holiday was introduced in July 2020 during the peak of lockdown.

Here’s the Youtube video we created that sparked the article by the media…

The property tax holiday meant buyers completing a purchase on a home for less than £500,000 did not have to pay stamp duty.

However, one of the biggest contributions to last year’s property market boom was the stamp duty holiday.The stamp duty holiday was introduced in July 2020 during the peak of lockdown.
The property tax holiday meant buyers completing a purchase on a home for less than £500,000 did not have to pay stamp duty.

Mr Hannah said stamp duty is a “hot topic” at the moment as experts gauge whether it will change in 2022.

Mixed-use properties

The finance expert said there were changes proposed late last year for mixed-use properties.

He explained: “In late 2021 HMRC published a consultation document on proposed changes to the mixed-use property rules and multiple dwellings relief.

“Meaning if you buy a property, currently, which has any element of non-residential or is not suitable for use as a dwelling then you don’t pay the higher residential rates of SDLT and HMRC are ‘consulting’ about how they can change that to remove the advantage that these properties have.

“One of the things they’re proposing is that we’re going to be required to split out the non-residential elements of the property and only pay the non-residential rates on that part.

“In their consultation document, they give an example of a house for £3.5million where the tax nearly doubles from £161,000 to £320,000.”

However, Mr Hannah said it’s “good news” for buyers who purchase a property for £1million or less as these changes, if implemented, won’t affect them “at all”.

“So there’s no need to worry about it,” he added.

Meanwhile, those buying large country estates and expensive homes in London will see changes.

Mr Hannah explained: “Where it’s really going to bite down is on large country estates and expensive London properties where certain features – which currently make them mixed-use will no longer be available.

“As a result, the tax savings aren’t going to be around.”

Multiple dwellings relief

HMRC is proposing to change the basis of calculating multiple dwellings relief.

For those that have a house with an annex, that’s a £10,000 saving minimum.

However, Mr Hannah said HMRC is proposing that the “granny annex advantage” should be eliminated which means any home with an annex that is worth less than a third of the main house, will no longer be eligible for multiple dwellings relief.

This could cost the average annexed house owner from £10,000 to £87,000.

The finance expert said “it’s clear” the revenue do not like the “tax advantage” these properties have despite the consultation document discussing its support for keeping families together.

Mr Hannah added: “I would say it’s not an advantage for certain taxpayers, it’s an advantage for certain properties.

“For most of us this will probably mean that over the course of 2022, possibly even early 2023, we’re going to see the law changed, but it can only be changed going forward.”

We are the UK’s leading Stamp Duty Land Tax reclaims experts. We’ve reclaimed over £15 million in the last 12 months. See if you are eligible for a Stamp Duty Refund.

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