Stamp Duty Land Tax (SDLT) is a tax levied on land transactions in all areas of the United Kingdom, except Scotland, where Land and Buildings Transaction Tax applies.
Buyers are required to pay SDLT when:
Stamp Duty Bands and Rates for Freehold sales and transfers
|Property or lease premium or transfer value
|Up to £125,000
|The next £125,000 (the portion from £125,001 to £250,000)
|The next £675,000 (the portion from £250,001 to £925,000)
|The next £575,000 (the portion from £925,001 to £1.5 million)
|The remaining amount (the portion above £1.5 million)
From 1st April 2016 an additional 3% on top of the normal SDLT rates may apply if buying a new residential property means you will own more than one property, whether a second home or let:
- Second home purchases below £40,000 are exempt from SDLT
- If your current (primary) property is not sold prior to completion on the new property you may be liable to pay the higher rates, though reclaim may be possible after the current property has been sold.
- Property buyers who own property and reside outside the UK will be liable for higher rate SDLT, as HM Revenue and Customs (HMRC) view ‘main residence’ based on where an individual actually lives, rather then the elected location, which differs from other taxes.
- Married couples and civil partners will be considered as a single unit, so if two properties are owned by the couple following the completion of the transaction the higher rates of SDLT will apply.
- Homes purchased by parents for children, where the purchase is in the parents’ name and where they already own another property, will be liable for the higher rates of SDLT. Where parents make a gift towards the deposit or purchase price, but the purchase is not in their name, then higher rates of SDLT will not apply.