Land & Buildings Transaction Tax (LBTT) can be charged in three different ways
If you buy a house at over £145,000 then there is a charge on the percentage price above that figure. The rates charged go from 2% on the excess up to £250,000 at the lowest level, up to 12% on the price above £750,000.
If you are buying commercial property then the tax is chargeable but at different rates. The tax starts for that at £150,000 and the top rate (above £350,000) is 4.5%.
As from 1st April 2016 there is an additional charge (of 3% in addition to any normal LBTT payable) if you are buying any house which is seen as “a second home” or being bought by a Company. This doesn’t apply to a property worth less than £40,000, but the rules are drafted really widely and can catch folk who think there are not affected.
If you buy before you sell
If you are simply moving home and buying your new house before you sell your old house, then you will have to pay the additional 3% on the purchase of the new house, although if you do sell your old house within 18 months then you can recover that element of the Tax.
If you or your family own another house (or part share)
If either you, or your spouse, or your co-habitee, or your Civil Partner, or any child under 16 of you, your spouse, your co-habitee or Civil Partner, own any share of another property then you will fall foul of the legislation. Accordingly, in the scenario that someone’s parents have gifted their house amongst all their children to protect the asset from Nursing Home fees, and then one of the children (or that child’s spouse, co-habitee or Civil Partner) then wants to buy their “first home” they will have to pay the Tax. The Tax on “second home” apparently also will apply even if the initial home is owned outside of the UK.
If Companies buy a dwellinghouse, or they buy a larger area including a dwellinghouse (for example an estate or a farm) the 3% charge will be levied (even if this is the first home the Company has bought) on that part of the overall value which is attributable to the dwellinghouse or houses.
These facts are correct as at June 2016. Whilst we do not provide tax advice, as part of our service to clients we are happy to confirm the anticipated LBTT payable in line with the government’s tables.