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.
The SDLT rate depends on:
- The purchase price of the property
- Whether the property is residential
- Whether the property is in a disadvantaged area
- Whether you own another more than one home (3% surcharge)
Rates from the 1st October 2021:
|Purchase Price of Property||Rate of SDLT|
|Up to £125,000||0%|
|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%|
From the 1st October 2021 you buy a house for £275,000. The SDLT you owe will be calculated as follows:
– 0% on the first £125,000 = £0
– 2% on the next £125,000 = £2,500
– 5% on the final £25,000 = £1,250
– Total SDLT = £3,750
If you’re Buying your First Home
If you are buying your first home after the 1st July 2021, you can claim a discount (relief) on SDLT on purchases up to £300,000. This means you’ll pay:
– no SDLT up to £300,000
– 5% SDLT on the portion from £300,001 to £500,000
– You are eligible, if you and anyone else you’re buying with are first-time buyers.
If the price is over £500,000, you follow the rules for people who’ve bought a home before.
Higher Rates of Stamp Duty Land Tax
Those purchasing a second home whether for personal enjoyment or letting out (long term or holiday) may be subject to increased rates of SLDT (usually 3% above the standard rate for each of the purchase price bands).
If you are Replacing your Main Residence
You will not need to 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 will still have to pay higher rates (because you own 2 properties), but you can apply for a refund if you sell your previous main home within 36 months.
Stamp Duty for Non-UK Residents
From the 1st of April 2021, different rates of Stamp Duty Land Tax (SDLT) will apply to purchases of residential property in England and Northern Ireland for those who are not resident in the UK. (By definition, if you are 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).
There is a 2% surcharge levied on the purchase of both freehold and leasehold property, as well as increasing the SDLT payable on rents on the grant of a new lease.
The surcharge also applies to certain UK resident companies that are controlled by non-UK residents.
The surcharge does not apply to purchases of non-residential property or mixed transactions unless Multiple Dwellings Relief is claimed, or to purchases of land or buildings in Scotland or Wales, further details of which can be found here > Scotland | Wales
Subject to certain conditions being met, relief is available, and there are certain circumstances when the surcharge does not apply, so we would encourage you to seek further advice.
There are also a number of different rules used in calculating SDLT in the following situations:
– 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.