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Stamp Duty Land Tax

Stamp duty land tax (SDLT) is payable on the purchase or transfer of property or land in the UK. The amount paid is based on the purchase price, but it is slightly more complicated for leasehold properties.

Last updated on January 18th, 2024 at 02:37 pm

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    Key Points

    • Stamp Duty Land Tax (SDLT) is generally based on the purchase price of the property, with different rates payable on different value bands
    • SDLT isn’t payable on inherited property, even if it still has a mortgage
    • First time buyers who purchase property of no more than £425,000 will not have to pay any SDLT
    • First time buyers who purchase property of no more than £625,000 will only pay 5% of the amount above £425,000
    • SDLT isn’t due on transactions under £250,000 but you’ll still have to file a SDLT return
    • Additional properties like buy-to-let attract a higher charge of SDLT
    • We can help you with filing your return to HMRC
    • Our conveyancing team is accredited with the Law Society’s Conveyancing Quality standard

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    For a sale of a residential freehold property

    The SDLT you pay is based on the purchase price of the property, but you pay a different rate on each band of value. The current rates are as follows:

    The remaining amount (the portion above £1.5 million)12%

    Freehold property value SDLT payable
    Up to £250,000 Zero
    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%

    So that means that for a freehold house purchased at a market value of £280,000, you will pay:

    • 0% SDLT on the first £250,000
    • 2% SDLT on the band from £250,001 to £280,000 = 2% of £29,999 = £599.98

    First time buyers

    In the government’s September 2022 mini budget it was announced that first time buyers would be exempt from stamp duty land tax, or pay a reduced rate, depending on circumstances. Rates payable are as follows:

    Purchase price for first time buyer SDLT payable
    Up to and including £425,000 0%
    £425,001 to £625,000 if total value is under £625,000 5%
    Over £625,000 SDLT is paid at standard rates on whole price

    For more information about stamp duty for first time buyers, please refer to the government’s guide.

    For a sale of a residential leasehold property

    Most houses in Sheffield are actually leasehold, with long leases: starting at 99 years but often as long as 900 years or more. Most flats are leasehold and many shared ownership schemes are also leasehold.

    When you buy a leasehold property, you own it for a fixed amount of time. You may buy an existing lease (an assigned lease) or a new one – for example, when buying a new build house or flat. The SDLT calculation is slightly different for existing/assigned leases and new leases:

    • Assigned leases mainly follow the same calculation as for freehold property
    • New leases will pay SDLT on the lease premium (essentially: the purchase price that the buyer pays to the freeholder) and also any rent – but this will usually be due only on quite high rents

    When is SDLT not payable?

    There are occasions when either SDLT is not payable, or you don’t need to file a SDLT return, or both. These are:

    Situation IS SDLT due? Does a return need to be filed?
    Transactions under £250,000 No Yes, unless the transaction is otherwise exempt under one of the other conditions below
    Freehold property bought for less than £40,000 No No
    Property left in a will or inherited under intestacy, even if it still has a mortgage on it No No
    Property transferred with no money/payment changing hands No No
    Property transferred in a divorce or dissolution of civil partnership No No
    New or assigned/existing lease with 7 years or more remaining on the lease, with a lease purchase price (premium) of less than £40,000 and an annual rent of under £1,000 No No (if the purchase price and annual rent was greater than these amounts, you would still have to fil a return)
    New or assigned/existing lease with less than 7 years remaining on the lease, if the purchase price is under £125,000 No (if the purchase price was greater than £125,000, then SDLT would be payable) No
    First time buyers purchasing a property costing no more than £425,000 No Yes

    There are also special reliefs on how much SDLT you pay when buying property in other situations, such as in shared ownership schemes and Right To Buy scheme council purchases.

    For shared ownership properties, you’ll pay the same rates of SDLT on property above £125,000 in the usual way, but you can choose how to pay the SDLT:

    • Pay the SDLT in one go on the total market value of the property you’re buying (this is a one-time payment regardless of the share you’re buying, and you won’t pay any further SDLT).
    • Pay the SDLT in stages – first on your initial share payment (if it’s above £125,000), then again once you’ve staircased to own more than an 80% share of the property. You may also pay SDLT on the total rent over the life of the lease if that rent total is over £125,000 (also known as the ‘net present value’)

    Stamp duty land tax on additional properties (including buy to let properties)

    When you buy an additional property (such as a buy to let property) that results in you owning more than one property (i.e., you are not replacing your main residence with the new property purchase), you’ll pay an extra 3% on top of the existing SDLT you would have owed. That means that the SDLT you owe will be as follows:

    Property Value Total SDLT payable
    Up to £125,000 3%
    The next £125,000 (the portion from £125,001 to £250,000) 5%
    The next £675,000 (the portion from £250,001 to £925,000) 8%
    The next £575,000 (the portion from £925,001 to £1.5 million) 13%
    The remaining amount (the portion above £1.5 million) 15%

    How to I pay SDLT?

    If you buy property, you’ll have to submit a return to HMRC within 30 days of the transaction (usually the completion date), along with payment of the SDLT. You will still have to submit a return even if your purchase falls under the SDLT threshold unless you pay less than £40,000 for it.

    Whilst we’ll complete and submit the form electronically for you, we must emphasise that you are ultimately responsible for ensuring that the information is accurate.

    If the return isn’t submitted to HMRC within 30 days penalties come into effect. There is a fixed penalty of £100 for the actual delay in submitting the form and the penalties increase the longer it is delayed.

    How can Graysons help?

    If you’re moving home and want an estimate on how much it will cost, please click here, 24 hours a day, for an instant estimate, or call us to discuss your transaction or make an appointment to see our property experts.

    Don’t forget that Graysons is accredited with the Law Society’s Conveyancing Quality standard, so you can rest assured that our expertise and quality of service is second to none.


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