Stamp Duty Land Tax (SDLT) – Reliefs & Exemptions

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SDLT reliefs may apply to certain buyers.

Here we take a look at the Stamp Duty Land Tax (SDLT) exemptions and reliefs currently available (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?

No!  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?

As at 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%

What Exemptions apply to the standard SDLT rates?

Exemptions currently apply to following:-

  • Divorce or Separation – where there is a Court order
  • Legacy – property left under the terms of a will
  • Gift – property gifted so long as it is free of mortgage. If you take over a mortgage as part of the gift you may be liable to SDLT on the amount the mortgage (which by definition is not then a ‘gift’)

Accordingly, NO tax is payable on those transactions listed above.

What Reliefs apply to SDLT?

The main two reliefs that apply to the payment of Stamp Duty Land Tax are:-

  • First Time Buyer; and
  • Multiple Dwelling

What is First Time Buyer Relief?

First time buyer relief gives a reduction against the standard rates as set out above.  For those that qualify for this relief (see below), the first £300,000 is free of tax.  For properties being bought at a value between £300,001 and £500,000 a rate of 5% applies.  Anything above that is at normal rates.

How do I qualify for First Time Buyer Stamp Duty Relief?

To qualify for first time buyer relief you must be:-

  • UK resident;
  • Buying a residential property for the first time; and
  • Have never owned a residential property before (UK or abroad)

SDLT is the personal responsibility of the buyer.

Do joint owners get First Time Buyer Relief?

First Timer Buyer relief will only apply where BOTH/ALL joint owners meet the first time buyer criteria.  If any one of the joint owners fails to meet the criteria, then the whole transaction fails to gain this relief.

What if I inherited a property previously – will I get First Time Buyer Relief?

To qualify for First Time Buyer relief you must have NEVER owned a residential property before.  Unfortunately, how you came to own a property is irrelevant.  So, whilst being given a property under the terms of a will is fully exempt from SDLT at that point, it will nevertheless count as ‘property owned’ when you then come to buy your own place later down the line.  Put another way, the SDLT regime would NOT see you as a ‘first time buyer’.

What is Multiple Dwelling Relief (MDR)?

Multiple Dwelling Relief (MDR) is where a purchaser of land buys more than one ‘dwelling’ in one ‘linked’ transaction.

What is a ‘Dwelling’ – Multiple Dwelling Relief?

A dwelling is a building that is already used as, or is suitable to be used as or adapted to a single dwelling of its own.  This is a matter of fact and the basic principle is that it is a dwelling independent of the ‘main property’ (eg with its own services, and perhaps even its own postal address).

What is a ‘Linked Transaction’ – Multiple Dwelling Relief?

A linked transaction is one where multiple dwellings form part of the same transaction between the same seller, and same buyer.

How do I work out Multiple Dwelling Relief?

MDR SDLT is calculated by taking the estimated price of each dwelling, applying normal rates to each one, thereby obtain an average liability, which is then multiplied by the total number of dwellings.  This is subject to a minimum of 1% duty if greater than the calculated amount using that formula.

What if my Purchase has a second ‘Dwelling’?

If you are buying a property with one or more buildings that may be deemed to be ‘dwellings’ you MUST advise your solicitor who can then explore this further with you.

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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