SDLTM09845B | SDLT – higher rates for additional dwellings – Transitional rules and the change of rate

Example 1

Josie entered into a contract to buy a dwelling for £400,000 on 1 August 2024 and completes the contract without prior substantial performance and without variation on 1 January 2025. Josie is liable to pay the higher rates on her purchase.

As Josie:

· exchanged contracts before 31 October 2024,

· completed her transaction after that date, and

· none of the exclusions to the transitional rules apply,

Josie is liable to pay the higher rates of SDLT on completion at a rate 3 percentage points above the residential rates of tax that applied between 23 September 2022 and 31 March 2025.

Example 2

Ray entered into a contract to buy a dwelling for £1.5m on 1 July 2024 and completes the contract without prior substantial performance and without variation on 1 May 2025. Ray is liable to pay the higher rates on his purchase.

As Ray:

· exchanged contracts before 31 October 2024,

· completed his transaction after that date, and

· none of the exclusions to the transitional rules apply,

Ray is liable to pay the higher rates of SDLT on completion at a rate 3 percentage points above the residential rates of tax that applied from 1 April 2025.

Example 3

Amelia entered into a contract to buy a dwelling for £250,000 on 1 January 2021. She paid the vendor the full consideration on 1 February 2021 with completion taking place on 1 November 2024. Amelia is liable to pay the higher rates on her purchase, and no changes to the contract that would affect the SDLT payable occur between substantial performance and completion.

As Amelia:

· substantially performed the contract before 31 October 2024,

· paid the higher rates of SDLT based on the temporary rates in force between 8 July 2020 and 30 September 2021, and

· as any additional SDLT would only arise at completion because of the ending of those temporary rates and the increase in the higher rates from 3 to 5 percentage points above the residential rates,

Amelia is not required to send a land transaction return to HMRC at completion and no additional tax liability arises.

Example 4

Graeme entered into a contract to buy a dwelling for £600,000 on 1 January 2025. He paid the vendor the full consideration on 1 February 2025 with completion taking place on 1 November 2025. Graeme is liable to pay the higher rates on his purchase. There were no changes to the contract that would affect the SDLT payable between substantial performance and completion.

As Graeme:

· substantially performed the contract between 31 October 2024 and 31 March 2025,

· paid the higher rates of SDLT at a rate of 5 percentage points above the temporary rates in force between 23 September 2022 and 31 March 2025, and

· as any additional SDLT would only arise at completion because of the ending of those temporary rates,

Graeme is not required to send a land transaction return to HMRC at completion and no additional tax liability arises.