Owners of flats who extend the lease of their apartment are likely to face an extra bill if their premium exceeds £40,000 thanks to changes in the law surrounding stamp duty.
Legal experts have highlighted that if homeowners apply to extend the lease of their main residence, they will be caught out new stamp duty land tax (SDLT) laws if it meets certain criteria, and will have to pay the higher rate if they own another property.
The new higher rate of stamp duty – which is known as the surcharge – was introduced by the government in April 2016. The premium is 3% above the normal cost of stamp duty.
Mark Vinall, partner at Winckworth Sherwood, explained that many flat owners may be surprised to find they are exposed to the SDLT liability when their premium does not exceeding the normal opening threshold of £125,000.
He also warned that the changes also meant that certain exemptions may not apply under the new rules.
Mr Vinall said: “Unfortunately the knock out from the charge for the replacement of your main residence does not apply as this only applies where different dwellings are involved.”
He added that HMRC were updating guidance on the higher rates of SDLT, specifically in the area of lease extensions.