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Stamp Duty Land Tax (SDLT) is a lump-sum tax that is paid if you buy property or land over a certain price in England, Wales and Northern Ireland.
All property buyers must declare the circumstances of any land transaction to Her Majesty's Revenue & Customs (HMRC). SDLT is payable when you:
You do not have to pay SDLT if you have inherited property from a Will or if property is transferred to you through a divorce.
From 22nd November 2017, if you are a first time buyer and you are buying a property for £300,000 or less in England or Wales, you will not need to pay Stamp Duty. If the property price is between £300,000 and £500,000, you will only pay stamp duty on the amount between £300,001 and £500,000, at a rate of 5%.
The amount of SDLT you must pay depends on the value of the property. SDLT is payable in increasing portions of the property price above £125,000:
For example, a property bought for £180,000 will be taxed at 0% for the first £125,000 and 2% for the next £55,000 so you will pay £1,100 in SDLT. If you are a first time buyer in England or Wales, you would not need to pay SDLT on this property.
Someone buying a £400,000 property would be charged 0% for the first £125,000, 2% for the next £125,000 and 5% for the remaining £150,000 which gives a total of £10,000 of SDLT to pay. If you are a first time buyer in England or Wales, you would be charged 0% for the first £300,000, and 5% for the next £100,000, for a total of £5,000 SDLT to pay.
You may also be liable to pay 3% on top of the normal SDLT rates if buying a new residential property as a second home or investment property. This additional 3% rate may apply even if the property you already own is outside England, Wales and Northern Ireland.
HMRC looks closely at transactions where the purchase price has been divided between land, and fixtures & fittings. HMRC are able to charge additional tax if they find that your declaration does not match the true value of these items.
In most cases, an SDLT return is sent to HMRC and the tax is paid within 30 days of completion of the purchase. There are certain exceptions to this where a return is not required.
There are certain situations where a transaction may be exempt from SDLT, such as:
If you would like assistance with paying SDLT or any other part of the conveyancing process, our specialist conveyancing solicitors can help. Call our team free today on 0370 1500 100 to find out more.
All Scottish cases will be handled by the Scottish law firm with which we are associated, Irwin Mitchell Scotland LLP. The law relating to conveyancing and property is different in Scotland and you will receive separate advice about what that means. Please visit our Scottish Conveyancing page for more information.
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