Following the 2010 budget, as from the 6th April 2011 the rate of Stamp Duty Land Tax (SDLT) payable on residential properties with a purchase price in excess of £1 million will increase from 4% to 5%. This increase will mean that buyers of homes worth over £1 million will pay at least £10,000 more in tax.

It is expected that this SDLT increase will follow the same general rules as for the lower thresholds and will therefore mean that once the purchase price for the property exceeds £1 million, the whole of the price will be liable to SDLT at 5%, not just the excess over £1m.

The SDLT increase will mostly affect buyers in London and the South East, where more than 60 per cent of properties worth more than £1 million are concentrated.

The increased rate of SDLT will apply on the 'effective date' of the transaction which in most instances will mean the completion of the sale and not the date the contract is exchanged. Therefore, to avoid paying the increased rate of SDLT then you will need to complete the transaction before 6th April 2011.

If you are looking to purchase before the rise then please contact Residential Property Partner Lisa Draper on 0207 722 9898 or e-mail her at lisa.draper@attwells.com