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TAX TIP TUESDAY: Do you live above your business property? Be careful with Stamp Duty if moving

Want to save tax this year? Read this week’s short Tax Tip, tailored for UK doctors and dentists to help you save money and get more organised with your tax affairs. Take 5 minutes to have a read.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 


Stamp Duty Land Tax on second homes

The surcharge on second homes was introduced as a measure to dampen activity in the buy-to-let market. However, there are some people that are being caught by the rule, even though they are not seeking investment property.

Following on from last Tuesday’s update regarding Stamp Duty Land Tax (SDLT), we now take a closer look at how you could end up having to pay the SDLT surcharge on second homes if you live above or attached to your business but want to move home.


Do you live above or attached to your practice?

Example:

Mr and Mrs Everly have owned a dental practice for 5 years and live in a self-contained flat attached to the practice. They want to move to another neighbourhood, to be closer to their children’s school and start to make the move to a home they can see themselves retiring in.

However, as they already own a significant share in another property, they will be subject to pay a 3 percent surcharge if moving to a new home, which on a £300,000 property is an additional £15,000, on top of the regular SDLT which would equal £5,000.

Mr and Mrs Everly didn’t go out to buy a rental home, but they do want to retain ownership of the property which their business operates from.

It is not uncommon for healthcare professionals to build up their business in this way. Now, practice owners are finding themselves in the unfair situation of not being able to move unless they incur signifiant costs, or relocate their business, which they have worked hard to build up.


Stamp Duty Rates

Property ValueTax rateSDLT amountSecond home / Buy-to-letTotal SDLT
£0 - £125,0000%£0+3%up to £3,750
£125,001 - £250,0002%£2,500 - £5,000+3%£6,250 - £12,500
250,001+5%12,500++3%£20,000+

Speak to an independent financial adviser when considering moving h0me where business premises are involved. Not only relating to SDLT but also for other tax planning opportunities. 


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