In the Autumn Statement, chancellor George Osborne announced a 3 per cent premium on stamp duty for buy-to-let investors and those buying second homes, aimed at raising £1bn by 2021.
Yesterday (28 December) HM Treasury stated higher rates of stamp duty will only apply to purchases of additional residential property which complete on or after 1 April 2016.
If contracts are exchanged after 25 November 2015 then the higher rates will apply if the purchase is completed on or after 1 April 2016.
However, if contracts were exchanged on or before 25 November 2015 but not completed until on or after 1 April 2016, the higher rates will not apply.
The HM Treasury paper also spells out under what circumstances it considers individuals are buying additional property - and who will be able to avoid the higher rate of stamp duty.
It also throws up questions it wants the industry to answer - and therefore reveals HM Treasury concerns about how this tax grab will work in practice.
The paper stated for married couples and civil partners will be treated as one unit so if either of them owns more than one residential property they must pay the higher rates when purchasing another property.
Married couples and civil partners are treated as living together, and therefore as one unit, unless they are separated: under a court order; or by a formal Deed of Separation executed under seal.
However in recognition of what many experts have called into question - how exactly will the government’s tax office collect this extra cash - HM Treasury asked whether treating married couples and civil partners as one unit until they are separated is appropriate when it comes to this new higher rate of stamp duty for additional property purchases.
The government also proposed that if, at the end of the day of a transaction, any of the joint purchasers has two or more properties and is not replacing a main residence, the higher rates will apply to the entire consideration for the transaction.
However, as the purchased property may be a first property for one or more of the joint purchasers, HM Treasury stated it is keen to hear from respondents as to whether this is the fairest outcome.
The paper also stated the government appreciates in many cases individuals and couples may help their children to get onto the property ladder.
HM Treasury clarified whether the higher rates of stamp duty will apply will depend on the structure of any transaction, and in particular who owns the property purchased.
For example where Mr and Mrs J own a main residence together and decide to purchase a property for their children to live in, the higher rates will apply.
But if Mrs J helps her son purchase his first residential property by giving him money towards a deposit and acts as a guarantor on the mortgage, then the son will own one property so the higher rates will not apply.