His argument was that this would make homeownership easier for first time buyers by introducing a 3% hike in stamp duty for buy-to-let property owners as well as second  home owners.

He stressed that this would also capture foreign investors.

Higher rates of SDLT will be charged on purchases of additional residential properties, such as buy to let properties and second homes, with effect from 1 April 2016. this will apply to additional property purchases valued at over £40,000.

The higher rates will be 3% above the current SDLT rates. At the same time changes to capital gains tax payment dates will be reduced to 30 days after completion rather than the current 10 to 22 month payment window.

Osborne said: 'This extra stamp duty raises almost a billion pounds by 2021 and we'll reinvest some of that money in local communities in London and places like Cornwall which are being priced out of home ownership.'

He added that the tax will not be payable by corporate property developers.

There will be a consultation on the new SDLT rate which will be 3% higher than the standard rate for purchases of properties by buy-to-let investors and those who buy second homes.

The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.

A major overhaul of the stamp duty system came into effect in December 2014 removing the former banding system with a more progressive approach to the property tax.

From April 2016, the following SDLT rates will apply for purchases of buy-to-let property and second homes:

* Purchases below £40,001 will be exempt from the SDLT surcharge and will not have to complete HMRC disclosure form

Stamp Duty Land Tax (SDLT) is payable on increasing portions of the property price above £125,000.

The government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

The new measure is estimated to add at least £1bn in SDLT tax receipts in 2016-17 versus the expected £11.2bn in 2015-16 under current rules.

The government also plans to reduce the payment window for SDLT filing and payment process from 30 days to 14 days. These changes will come into effect in 2017-18 and will be legislated in Finance Bill 2017.

There are warnings that policing the definition of second home purchases could be problematic as owners could potentially flip homes.

Frank Nash, partner, at Blick Rothenberg LLP said: ‘It is going to be challenging to police the SLDT surcharge for second homes – a purchaser could easily declare the new home as their main residence immediately.’ 

The new rates of SDLT will come into force from April 2016.

The SDLT consultation details are not available as yet but will have to be released shortly to allow enough time for consultation before the new rates come into force from the new tax year 2016/17.

Capital gains tax payment deadline

There will also be an acceleration of the payment date for capital gains tax (CGT) on residential property to 30 days after completion from 2019.

Jacqui Gudgion, tax director at Mercer & Hole said that there were ‘a few things to note in relation to this – the most obvious being to highlight that a majority of disposals of residential property are not subject to CGT by virtue of the principle private residence relief (PPR).

‘There is also a question of complexity being created. The standard date that triggers a capital gain is the date of contract. This new provision dictates that the payment date for any tax due will be 30 days after completion.  A delayed completion date could create a disposal and payment date years apart.’

The changes to the CGT deadline is not due to affect properties where private residence relief can be claimed, although full consultation will reveal more details.

Tina Riches, national tax partner at Smith & Williamson, the accountancy and investment management group, says: ‘The additional requirement for businesses and landlords to report income quarterly to HMRC from 2020, will also be extremely unwelcome red tape.’

The government will use some of the additional tax collected to provide £60m for communities in England where the impact of second homes is particularly acute. The tax receipts will help towards doubling the affordable housing budget and help first-time buyers, it said.

Quarterly reporting for landlords

Landlords will also be caught up in HMRC’s race towards full digitalisation of tax services. This includes a requirement for quarterly reporting through the government’s new digital tax accounts, which when rolled out fully by 2020 will give HMRC full view of taxpayers’ affairs.

The Blue Book states that  by 2020, the government will ‘require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account’.

However, tax affairs and property tax issues are increasingly complex and it is unlikely that most buy-to-let landlords will handle their own tax without input from an accountant or tax adviser.

The new reporting requirements ‘will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property’.

The government will consult on the details in 2016.

Annual tax on enveloped dwellings

In addition, the government will extend the reliefs available from Annual Tax on Enveloped Dwellings (ATED) and the 15% higher rate of SDLT to equity release schemes (home reversion plans), property development activities and properties occupied by employees from 1 April 2016.

This move follows the announcement in July in the Summer Budget to restrict tax relief on finance costs for individual buy-to-let landlords of residential property to the basic rate of tax from the current allowance set at the 40% rate.

The restriction will be phased in over four years, starting from April 2017.

At the same Budget, changes to the ‘wear and tear allowance’ applicable to property businesses will see the current annual allowance of 10% replaced with a relief based on the cost actually incurred in replacing furnishings.

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