Stamp Duty Land Tax (SDLT) is a high-profile tax in the property world, both from the perspective of failing tax avoidance schemes and also because of the introduction of complex legislation applying penal rates of SDLT along with an annual tax charge on “Enveloped Dwellings” (ATED).
Our specialist property tax team is always at the forefront of any tax legislation changes. We digest, interpret and apply the regulations to give clear, commercial and expert advice.
Stamp Duty Land Tax in England and Northern Ireland
Stamp Duty Land Tax is payable by the purchaser on the price paid for the property. The rates of SDLT differ for residential and non-residential property and are shown in the table below – it can be seen that the rates for residential property are generally much higher. There are also 2 sets of residential rates, which might be referred to as the lower rates and the normal rates.
The normal (higher) rates always apply except where the purchaser is an individual and either:
- After the acquisition owns only one residential property anywhere within the world; or
- He or she is replacing his or her main home – special rules define what it’s the replacement of a main home.
- And certain other situations involving partnerships and trusts where the above is deemed to apply.
A special penal SDLT rate of 15% applies where a property is acquired by a company for use by the company owners.
There are reliefs and exemptions where a person:
- Acquires more than one property in a single transaction;
- For acquisitions of residential property by housebuilders and other property traders in defined situations; or
- Where a mix of residential and non-residential property is acquired.
At present SDLT applies in the same way to UK and non-UK residents. The Government is consulting on proposals whereby non-UK residents will be subject to an additional 1% SDLT on the acquisition of residential property.
In July 2020’s Summer Economic Update (aka A Plan for Jobs), the ‘nil rate band’ of Stamp Duty Land Tax (‘SDLT’) on residential property in England and Northern Ireland was increased from £125,000 to £500,000. It took effect from 8 July 2020 and lasted until 30 June 2021.
From 1 July 2021, the nil rate band was reduced to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.
In September 2022’s Growth Plan, the nil rate band changed to £250,000.
It’s not limited to first-time buyers or even to individuals buying for their own occupation: it applies equally to purchases by companies and buy-to-lets (though in each case the existing 3% surcharge applies, and the nil rate band doesn’t apply at all to any company purchases costing over £500,000 if they are caught by the penal 15% rate).
SDLT Rates:
Residential property
| Transfer value | Normal
SDLT rate |
Additional
SDLT rate |
| Up to £250,000 | Zero | 3% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% | 13% |
| The remaining amount (the portion above £1.5 million) | 12% | 15% |
Non-residential property
| Transfer value | SDLT rate |
| Up to £150,000 | Zero |
| The next £100,000 (the portion from £150,001 to £250,000) | 2% |
| The remaining amount (the portion above £250,000) | 5% |
Scotland and Wales
SDLT no longer applies in Scotland and Wales which have their own transfer taxes known as Land and Buildings Transaction tax (LBTT) and Land Transaction Tax (LTT) respectively.
The detailed rules for LBTT and LTT are very similar to those for SDLT although there are some important differences. The rates are also different. These taxes are collected and administered by Revenue Scotland and the Welsh Revenue Authority rather than by HMRC.
How BKL can help
We can assist you in minimising transfer taxes on the acquisition of your property ensuring that reliefs are claimed wherever possible.
For more information or help from one of our property and real estate specialists, please contact us using our enquiry form.
