What is Stamp Duty Land Tax?

Stamp Duty Land Tax is tax you must pay if you buy a second property or property or land over a certain price in England and Northern Ireland.

The current threshold for your first property is £125,000 for residential properties and £150,000 for non-residential land and properties.

• You pay SDLT when you buy a freehold property, a new or existing leasehold or a property through a shared ownership scheme.
• If you are buying your first home, you do not pay STLD if the purchase price is under £125,000.00 and can claim relief on purchases up to £500,000.00
• If you are buying a second property you pay 3% STLD on properties under £125,000.00 and a 3% surcharge on top of the standard rates over £125,00.00

How much do you pay?

The amount of SDLT payable is case-specific, therefore you should use HMRC’s SDLT calculator via their website. However, you can use the information below as a general guide to SDLT.

If you are buying your first residential property:

• You usually pay SDLT on increasing portions of the property price above £125,000.
• The table opposite details the SDLT rates for the portions as they increase above £125,000.

If you are a first time buyer:

• You can claim a discount so you do not pay any tax up to £300,000 and 5% on the portion from £300,001 to £500,000.
• You must complete an SDLR to claim relief, even if no tax is due.

If you are buying a property in addition to your main home (even if you live abroad) after 1st April 2016:

• You will pay an additional 3% SDLT for the first £125,000 instead of the 0% Standard Rate.
• You will pay 5% on the portion between £125,001 and £250,000.
• You will pay 8% on the amount above £250,001.
• You will pay 13% on the amount above £925,000.
• You will pay 15% on the amount above £1,500,000.00
• If you still own two properties on the first day of completion of the purchase of your second property, but still legally own your first property and plan to sell, you are still obliged to pay the higher rate of SDLT. A refund is available if you plan to sell your former residence property within 36 months.
• Caravans, houseboats, mobile homes and properties under £40,000 are exempt from the higher rate of SDLT.

If you are buying non-residential and mixed use land property:

• You pay SDLT on increasing portions of the property price when you pay £150,000 or more.

• Non-residential property includes commercial property, agricultural land, forests, 6 or more residential properties bought in a single transaction, but overall any land or property which is not used as a residence. 
• ‘Mixed use’ property is one that has both residential and non-residential elements, e.g. a flat connected to a shop.

Land and property transfers:

• You may have to pay SDLT if the ownership of land or property is transferred to you in exchange for any payment or ‘consideration’.
• The rules around SDLT depend on the specific circumstances surrounding the transfer, which might be as a result of marriage/ civil partnerships/ moving in together or divorce/ separation/ end of a civil partnership when the property/land is joint owned.
• Other circumstances could include if the property/ land is given as a gift or left in a will, or when it is transferred to or from a company.

Exemptions:

• You do not have to pay SDLT or file a return if no money/other payment changes hands in a transfer.
• If property is left to you in a will
• If property is transferred because of divorce/dissolution of a civil partnership.
• If you buy a freehold property for less than £40,000 and the annual rent is less than £1,000.
• If 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.
• If you use alternative property financial arrangements, for example to comply with Sharia law.

How and when to pay:

• You must send an SDLT return to HMRC and pay the tax within 14 days of completion

• If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees.

• You may be charged penalties and interest if you do not file your return and make your payment within 14 days of completion.