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Stamp Duty Land Tax (SDLT)

Are you buying a house? Do you know how much stamp duty land tax will you pay? Do you know what the SDLT rates are?

Are you buying a house? Do you know how much stamp duty land tax will you pay? Do you know what the SDLT rates are?

Stamp Duty Land Tax (“SDLT”) is charged on the purchase of property and is for the buyer to pay. The SDLT rules can be complicated and differ depending on whether you are purchasing a residential property (e.g. a new home or a buy to let property) or whether you are purchasing commercial or mixed use property. This page focuses only on SDLT for residential property. For information on the SDLT rules for commercial or mixed use property please see VAT, SDLT and Capital Allowances.

How is SDLT calculated?

Stamp Duty Land Tax must be paid when you purchase a residential property for £125,000 or more in England, Wales or Northern Ireland. The total amount on which SDLT is charged is known as the ‘consideration’ and this is usually just the price that you have paid for the property. However, this can also include other types of consideration such as giving goods or releasing someone from a debt. If your purchase is perhaps more complicated than a straightforward open market purchase it is worth obtaining advice on SDLT as early as possible in order to establish what your SDLT liability is likely to be.

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Please do not hesitate to contact a member of the team at Everyman Legal on 01993 893 620 for a free discussion or email michelle.hunt@everymanlegal.com

SDLT rates for freehold purchases

 

The SDLT rates for freehold purchases are as follows:

Consideration SDLT rate
Up to £125,000 Nil
The next portion from £125,001 to £250,000 2%
The next portion from £250,001 to £925,000 5%
The next portion from £925,001 to £1.5million 10%
The portion above £1.5million 12%

 

 

 

So, if you purchase a house for £300,000 the SDLT you will need to pay would be calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £50,000 = £2,500

The total due would be £5,000.

The gov.uk website has an online calculator  which will calculate the amount of SDLT due on straightforward purchases.

SDLT rates for leasehold purchases

When you purchase a leasehold property you pay SDLT on the ‘lease premium’ (i.e. the amount you are paying to buy the lease) using the same rates as above. If the total rent over the life of the lease is more than £125,000 you will also pay SDLT on 1% on the portion over £125,000. Most residential long leases charge only a ‘peppercorn’ or ‘nominal’ rent so there is never any SDLT to pay above the SDLT on the premium.

Higher rates for additional properties

If you are purchasing a property which will result in you owning 2 or more residential properties then you will likely have to pay an additional 3% SDLT on top of the usual rates. You will also need to pay the additional rates if you are purchasing property jointly with someone else who already owns one or more properties, even if you do not. The higher rates for additional properties are as follows:

Consideration SDLT rate
Up to £125,000 3%
The next portion from £125,001 to £250,000 5%
The next portion from £250,001 to £925,000 8%
The next portion from £925,001 to £1.5million 13%
The portion above £1.5million 15%

 

You will not need to pay the extra 3% if the property you are buying is replacing your main residence and your previous main residence has already been sold. However, if there is a delay in selling your main residence you would need to pay the higher rates of SDLT on the purchase of your second property and then obtain a refund once your previous property has been sold (this must be within 36 months in order to be eligible for the refund).

Our dedicated team, based in Witney, Oxfordshire, would be happy to answer your questions.

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When must SDLT be paid?

SDLT must be paid within 30 days of completion. Your solicitor will usually prepare your SDLT return on your behalf and send this to HMRC for you electronically along with the SDLT payment. You will not need to pay SDLT or file a return online if:

  • the property is a gift and you do not pay for it;
  • the property is left to you in a will; or
  • you buy a freehold property for less than £40,000.

If your return is not filed, and payment is not made, within 30 days of completion then you may be charged penalties and interest.

Reliefs and Exemptions

Relief from SDLT is available in certain circumstances, which can reduce the amount of SDLT you will need to pay. The available reliefs are limited but more information can be found at gov.uk/stamp-duty-land-tax .

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