Stamp Duty Land Tax (SDLT or Stamp Duty) is a tax placed on property purchases over a certain price in England and Northern Ireland. It is paid on purchases of freehold, leasehold, shared ownership, transfers of equity in exchange for payment or taking on mortgage debt.
The amount of money that is taxed is known as the “consideration”. Stamp Duty must be paid on the consideration within 30 days of completion.
The current rates of Stamp Duty for residential property purchases are:-
|Up to £125,000||0%|
|The next £125,000 (£125,001 to £250,000)||2%|
|The next £675,000 (£250,001 to £925,000)||5%|
|The next £575,000 (£925,001 to £1.5m)||10%|
|The remaining amount (above £1.5m)||12%|
For freehold properties, the above table is all you pay.
For new build leasehold properties, there are two elements that both make up the consideration. The first is the lease premium – essentially the “purchase price”. SDLT on this is calculated based on the residential rates above. The second is the total rent over the term of the lease. If this is in excess of £125,000, you pay an additional 1% on the amount above £125,000. The rent would have to be extremely high in order to trigger this.
Owning multiple properties
If the purchase means you will own more than one property, a 3% premium applies to the residential rates table. However, if the consideration is lower than £40,000, no SDLT is payable. If you or your spouse/civil partner owns or has an interest in any other property in the UK or anywhere else in the world you will be classed as owning more than one property.
|Up to £40,000||0%|
|Up to £125,000||3%|
|The next £125,000 (£125,001 to £250,000)||5%|
|The next £675,000 (£250,001 to £925,000)||8%|
|The next £575,000 (£925,001 to £1.5m)||13%|
|The remaining amount (above £1.5m)||15%|
The multiple property premium doesn’t just hit buy-to-let landlords and those with holiday homes: if you’ve bought a new property as your main residence but your previous property has not sold, you are still classed as owning two properties. If you manage to sell your former residence within 3 years you can apply for a Stamp Duty refund.
Stamp Duty rates for First Time Buyers
The Stamp Duty rules for First Time Buyers have been chopped and changed by recent governments in order to try to help First Time Buyers get on the property ladder.
The latest rules were imposed with immediate effect following the budget on November 22nd 2017. They provide an exemption/reduction for purchases valued at £300,000 or less and a discount for purchases under £500,000. For residential purchases of more than £500,000 normal rates apply on the full amount.
|Up to £300,000||0%|
|The next £200,000 (£300,001 to £500,000)||5%|
Note that all parties purchasing and any spouse/civil partner must be First Time Buyers in order to qualify for these rates and must never have owned or had a share in any other property in the UK or anywhere else in the world.
Commercial and mixed use property
Stamp Duty rates for non-residential freehold purchases are as follows.
|Up to £150,000||0%|
|The next £100,000 (£150,001 to £250,000)||2%|
|The remainder (above £250,000)||5%|
As with residential leasehold purchases, SDLT rules on new commercial leasehold purchases take into account the purchase price (or “lease premium”) as well as the amount of rent paid over the term of the lease in order to formulate the consideration.