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Stamp Duty Land Tax (SDLT)

What is Stamp Duty Land Tax?

When you are buying a home, you have to think about expenses like legal costs, agent fees and possibly stamp duty or land tax.

Stamp Duty Land Tax (SDLT) has to be paid to HMRC if you buy a property or land over a certain threshold in England and Northern Ireland.  The tax in Scotland and Wales is different.  This has to be paid within 14 days of the property purchase or transfer and your solicitor, agent or conveyancer will possibly take care of this but please check first.

You pay SDLT when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, for example, you take on a mortgage or buy a share in a house

Tax Advisory UK can help you with all your tax planning and tax investigations offering the best client service available in the industry.

Our goal is simple, to provide all our clients with tax-saving solutions by engaging you with highly regarded Chartered Tax Advisors (CTA) and respected Tax Investigators.

Thresholds

The SDLT threshold for residential properties is currently set at £500,000 with expected changes in July 2021.  There is a £150,000 threshold for non-residential land and properties and no SDLT has to be paid under these thresholds mentioned.

For property purchases from 1st July to 30th September 2021 the SDLT threshold will be £250,000 for residential properties.

For property purchases from 1st October 2021, the SDLT will be £125,000 bringing them back to before they were changed on 8th July 2020.  The SDLT for non-residential properties and land properties will be £150,000 throughout.

 

First-time buyers

If you are a first-time buyer, or anyone you are buying a property with is, and the purchase price is less than £500,000 you may be entitled to pay less or no tax at all.

You’ll also be eligible for this discount if you bought your first home before 8 July 2020.

 

Residential SDLT property rates

The SDLT rates on residential properties that you pay will depend on the price of the property and when it was bought.  The SDLT increases as the property value increases.

8th July 2020 to 30th June 2021

Property or lease premium or transfer value SDLT rate
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

1st July 2021 to 30th September 2021

Property or lease premium or transfer value SDLT rate
Up to £250,000 Zero
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

SDLT rates from 1st October

Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

 

Non-residential and mixed land and property SDLT rates

As with the residential SDLT rates, the rate you would have to pay increases with different portions of the non-residential and mixed land and property rates.  The SDLT threshold is £150,000.

Freehold sales and transfers

Property or lease premium or transfer value SDLT rate
Up to £150,000 Zero
The next £100,000 (the portion from £150,001 to £250,000) 2%
The remaining amount (the portion above £250,000) 5%

New leasehold sales and transfers

Net present value of rent SDLT rate
£0 to £150,000 Zero
The portion from £150,001 to £5,000,000 1%
The portion above £5,000,000 2%

A non-residential property includes:

  • commercial property, for example shops or offices
  • property that isn’t suitable to be lived in
  • forests
  • agricultural land that’s part of a working farm or used for agricultural reasons
  • any other land or property that is not part of a dwelling’s garden or grounds
  • 6 or more residential properties bought in a single transaction

 

SDLT reliefs and exemptions

HMRC provide certain SDLT reliefs and exemptions to help reduce the amount of tax you have to pay.

HMRC reliefs can be for:

  • first-time buyers
  • multiple dwellings
  • building companies buying an individual’s home
  • employers buying an employee’s house
  • local authorities making compulsory purchases
  • property developers providing amenities to communities
  • companies transferring property to another company
  • charities
  • right to buy properties
  • registered social landlords
  • Crown employees

HMRC SDLT exemptions

You do not have to pay SDLT or file a return if:

  • no money or other payment changes hands for a land or property transfer
  • property is left to you in a will
  • property is transferred because of divorce or dissolution of a civil partnership
  • you buy a freehold property for less than £40,000
  • you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
  • you buy a new or assigned lease of less than 7 years, as long as the amount you pay is less than the residential or non-residential SDLT threshold
  • you use alternative property financial arrangements, for example to comply with Sharia law.

Contact Tax Advisory UK today and we will arrange a meeting with some of the UK’s most qualified and experienced Chartered Tax Advisors to help with all Stamp Duty Land Tax inquiries.  Please call 07908 074954.

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