Stamp Duty Land Tax

If you buy either property or land in the UK you have to pay Stamp Duty Land Tax (SDLT).

This is charged on all purchases of houses, flats and other land and buildings, and is normally paid directly to your solicitor with your funds for the purchase of the property.

Rates from the 23rd September 2022:

Example

In October 2022 you buy a house for £295,000. The SDLT you owe will be calculated as follows:

– 0% on the first £250,000 = £0
– 5% on the final £45,000 = £2,250
– Total SDLT = £2,250

If you’re Buying your First Home

You can claim a discount (relief) if the property you buy is your first home. This means you’ll pay:

– no SDLT up to £425,000
– 5% SDLT on the portion from £425,001 to £625,000

You are eligible, if you and anyone else you’re buying with are first-time buyers.

If the price is over £625,000, you cannot claim the relief. Follow the rules for people who’ve bought a home before.

Example

You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:

– 0% on the first £425,000 = £0
– 5% on the remaining £75,000 = £3,750
– Total SDLT = £3,750

New leasehold sales and transfers

When you buy a new residential leasehold property you pay SDLT on the purchase price of the lease (the ‘lease premium’) using the rates above.

If the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you’ll pay SDLT at 1% on the portion over £250,000.

This does not apply to existing (‘assigned’) leases.

Higher Rates of Stamp Duty Land Tax

You’ll usually have to pay 3% on top of SDLT rates if buying a new residential property means you’ll own more than one.

For more info please feel free to contact us or visit the Government site here.

If you are Replacing your Main Residence

You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

If you have not sold your main residence on the day you complete your new purchase you’ll have to pay higher rates. This is because you own 2 properties.

You can apply for a refund if you sell your previous main home within 36 months.

If it takes longer than 36 months to sell your previous main home

You may still be able to get a refund of the extra 3% SDLT if all of the following apply:

– you purchased your new home on or after 1 January 2017
– exceptional circumstances stopped you from selling your old home, for example government restrictions because of coronavirus (COVID-19) or a public authority blocking the sale
– you have now sold your old home

To claim a refund, write to HMRC and explain why the sale took longer than 36 months.

Include:

– your details
– details of the main buyer – if different to your own
– details of the exceptional circumstances that prevented the sale of your property
– details of the property where higher rate SDLT was paid – including the address, date of purchase and SDLT unique transaction reference number
– details of the previous main residence – including the address, date of sale and SDLT unique transaction reference number
– the amount of higher rate SDLT paid
– the amount of tax you’re asking for a repayment of
– a bank account and sort code for the person receiving the payment

Rates if you’re not a UK resident

If you’re not present in the UK for at least 183 days (6 months) during the 12 months before your purchase you are ‘not a UK resident’ for the purposes of SDLT.

You’ll usually pay a 2% surcharge if you’re buying a residential property in England or Northern Ireland.

You may not have to pay a surcharge on certain properties, transactions or if you’re a particular type of buyer. Check the rules on who has to pay the surcharge, when you do not have to pay, and if you can claim relief.

If you have to pay the surcharge, you’ll also have to pay any other rates of SDLT that apply, for example:

if you already own a property and you’re buying an additional property
if you’re a first-time buyer

Special Rates

There are also a number of different rules used in calculating SDLT in the following situations:
–corporate bodies
– people buying 6 or more residential properties in one transaction
–shared ownership properties
– multiple purchases or transfers between the same buyer and seller (‘linked purchases’)
– purchases that mean you own more than one property
– companies and trusts buying residential property

If you believe you fall into one of these categories, we would again encourage you to review the government website, or seek further guidance.

For more information on how to calculate your Stamp Duty Land Tax, please visit: Stamp Duty Land Tax.