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Conveyancing Guide

Stamp Duty Guide

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.

Who Has To Pay Stamp Duty Land Tax?

All property buyers must declare the circumstances of any land transaction to Her Majesty's Revenue & Customs (HMRC). SDLT is payable when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, e.g. you take on a mortgage or buy a share in a house

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.

Stamp Duty Changes For First Time Buyers - From 22nd November 2017

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%.

How Is Stamp Duty Land Tax Calculated?

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:

Property/Lease Premium Or Transfer Value SDLT Rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

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.

When Is Stamp Duty Land Tax Paid?

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.

Are There Any Exemptions To Stamp Duty Land Tax?

There are certain situations where a transaction may be exempt from SDLT, such as:

  • where no money or other payment changes hands for a land or property transfer
  • where the property is inherited under a Will
  • property is transferred because of divorce or dissolution of a civil partnership
  • where a freehold property is purchased for less than £40,000
  • where you are a first time buyer purchasing a property with a value of £300,000 or less
  • upon the purchase or assignment of a lease of 7 years or more, so long as the premium is less than £40,000 and the annual rent is less than £1,000
  • upon the purchase or assignment of a lease of less than 7 years, as long as the amount paid is less than the residential or non-residential SDLT threshold

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.



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