What Is Stamp Duty Land Tax?

Last updated 06/07/2018

Tax, Stamp Duty Land Tax, Sdlt

Stamp Duty Land Tax (SDLT) is a tax that applies on all properties that are brought in England and Northern Ireland, you have to pay this on any residential property that costs over £125,000.

SDLT is also called ‘consideration’, and is the additional price you pay for property or land.

This can include another type of payment such as goods, works/services, release from debt or the transfer of debit like an outstanding mortgage.

How much Stamp Duty Land Tax (SDLT) you pay is all dependent on the property value and if you are a first time buyer, buying a residential property or non-residential/ mixed use property. They all have their pro’s and con’s.

Important note - Did you know? You can claim relief as a first time buyer or when buying multiple properties.

Threshold

The threshold for the tax is currently at £125,00 for residential properties and £150,00 for non-residential properties.

The tax is different if you buy a property in Scotland or Wales.

First Time Buyers

If you are a first time buyer then you will not have to pay Stamp Duty Land Tax, provided your property was purchased on or after 22nd December 2017 and the price was under £500,000.

If the price is over £500,000 then you will still need to pay Stamp Duty Land Tax regardless if this is your first property.

You will also need to pay SDLT if you buy a freehold property, a new or existing leasehold property, go into a shared ownership scheme or transfer land or property in exchange for payment.

Rate Bands

The rate bands for Stamp Duty Land Tax is currently as follows;

  1. Property Value of £125,000 0%
  2. Property Value of £125,001- £250,000 2%
  3. Property Value £250,001- £925,001 5%
  4. Property Value £925,001- £1.5 Million 10%
  5. Property Value over £1.5 Million 12%

There are a number of online calculators you can use to work out the SDLT dependent on the property value. Here’s a Stamp Duty Land Tax calculator from the .gov website.

Second Homes

You will still need to pay Stamp Duty Land Tax if you are buying a second or multiple homes that are over the value of £40,000 with an added 3% on the relevant band and this also includes buy to let properties.

Reductions

Stamp Duty Land Tax can be reduced or could even not apply in certain situations.

If the property is only slightly over the threshold band you could try and see if the seller will except a lower price. If you are transferring a proportion of the house over in a divorce or separation case you will not have to pay SDLT. This also applies in the transfer of deeds.

How to Pay

You will have to send a SDLT return to the HMRC and pay the tax within 30 days of completion. Normally, your solicitor, agent or conveyancer will file and pay the tax on your behalf adding this to their fees. You can incur penalties if you have not paid it in the specified time frame.

Whether it is the first time, or fifth time make sure you factor into your budget the relevant SDLT implications as this will have an impact on your budget as an additional cost, fundamentally affecting your income further down the line.

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