A proposed amendment to the Finance Bill will remove the ‘annexe’ tax when applied to purchasing a second property.
Individuals buying a self-contained annexe liable for SDLT will not be liable for the increased rate of stamp duty land tax (SDLT) introduced on 1 April 2016.
The exemption will only apply to a property with 2 or more dwellings in the grounds of a main home – worth 2/3 of the overall price.
If a house including a separate annex is bought for £600,000, the annex can’t be worth more than £200,000. If so, the 3% SDLT charge will apply to the full price.
If the annexe is below £200,000 then SDLT will apply at the normal rate on the full price.
If purchasing a property as a second home or buy to let, the new SDLT surcharge will apply.
The government recently announced the change following the introduction of an extra 3% stamp duty land tax (SDLT) surcharge on additional property sales.
|Thresholds||Existing SDLT rates||New SDLT rates|
|£0 – £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1,500,000||10%||13%|
In his speech in April to the House of Commons, David Gauke, said:
“I am happy to reassure the House that that is not our intention and the government will table an amendment in Committee to correct the error and ensure fair treatment for annexes.”