Stamp Duty Land Tax (SDLT) – Higher Rates

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SDLT higher rates apply depending upon the circumstances of the buyer (not the property).

Here we take a summary look at the Stamp Duty Land Tax (SDLT) higher rates that currently apply (Aug 2022).

What is Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax (SDLT) is currently paid by the purchase of residential land in the UK.  It is paid at specified rates depending upon the value of the land or property.

Does SDLT apply to the whole of the UK?

These rates apply to England and Northern Ireland only.  Scotland and Wales each have their own systems of taxation of land being bought.

What are the standard SDLT rates in the UK?

Since October 2021, the current Stamp Duty Land Tax rates are:-

Property Value SDLT rate
Up to £125,000 Zero
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5mil 10%
£1.5mil + 12%

When do Higher Rates of Stamp Duty apply?

As a broad brush, higher rates will be payable where ALL of the following apply:-

  • It is not your only (worldwide) residence
  • Has value of £40,000 or more
  • You have not disposed of your previous main home; AND
  • No one else has a lease on it of more than 21 years

What are Higher Rates of Stamp Duty Land Tax (SDLT)?

As at October 2021, the current Higher Rate Stamp Duty Land Tax rates are 3% higher than standard rates as follows:-

Property Value SDLT rate
Up to £125,000 3%
£125,001 – £250,000 5%
£250,001 – £925,000 8%
£925,001 – £1.5mil 13%
£1.5mil + 15%

What if the second home is worth less than £40,000?

In the unlikely event that you can find a second home for less than £40,000 then the higher rate bandings would NOT apply.

Does High Rate SDLT apply on Divorce?

Transfers that are part of a separation or divorce and arise out of a Court Order will be exempt from SDLT in any event (higher rates or otherwise).

What if I intend to live in the new property eventually?

If you have bought a property which will not permanently be a second home (ie you intend to sell your previous home in due course), then you will still have to pay higher rate tax for now (and claim it back subject to certain criteria – see below).

Higher rate SDLT payments can sometimes be reclaimed.

How do I claim back Higher Rate SDLT after selling a former home?

You can claim back Higher Rate SDLT paid at a point where you simultaneously owned more than one ‘home’ within 3 years of buying the second home, and within 12 months of selling your former home.  Failure to submit a reclaim within these periods is likely to leave unable to claim any refund from HMRC.

What are the rates of SDLT for Non UK Residents?

Non UK residents pay a higher rate in any event of 2% higher than standard rates.  They are therefore:-

Property Value SDLT rate
Up to £125,000 2%
£125,001 – £250,000 4%
£250,001 – £925,000 7%
£925,001 – £1.5mil 9%
£1.5mil + 10%

What if only one buyer (joint purchase) is Non UK Resident?

A freehold purchase where one or more purchaser is non UK resident will nevertheless result in this surcharge applying to the whole value of the property.

What if I am married – does HMRC give two lots of Reliefs?

Unfortunately not!  So, a married couple with, say an investment property, would be deemed to have a property and therefore would attract higher rate thereafter.  HMRC do NOT see a married couple as being two tax payers for the purposes of SDLT.

What if I am gifting my children money for a deposit?

This should be exempt from SDLT (second home) so long as the property is purchased in your child’s name.  Any type of joint ownership involving a second home owner attracts the higher rate for the whole value of the property – not just the portion owned by the second home owner.

Want to know more about SDLT Reliefs & Exemptions?

If this or any of our other many posts don’t quite give you the information you need – please reach out!  Our team of expert conveyancing solicitors are here to help!

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