What is Stamp Duty Land Tax (SDLT)?

Views: 2,509

Share this article...

Stamp Duty Land Tax (SDLT) is paid by the purchaser of residential land/property.

Stamp Duty Land Tax (SDLT) is a tax paid on buildings and land over a certain value in the UK.  Here, we take a look at the basics of the tax, how it works, and what the rates currently are the time this post is being written (August 2022).

What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax (aka Stamp Duty or SDLT) is a tax paid on the value of land or buildings over set thresholds.  Those thresholds change from time to time.  It applies to England and Northern Ireland.  Although Wales is the same legal jurisdiction, it replaces SDLT in April 2018 with its own Land Transaction Tax.

Who pays Stamp Duty Land Tax (SDLT)?

SDLT is paid by anyone buying residential land or buildings in England or Northern Ireland over the value of £125,000.  NB reliefs apply to First Time Buyers.

Do I pay SDLT on property that I am selling?

No!  SDLT is paid by the buyer only – NOT a seller!

How much are the current Stamp Duty Land Tax (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%

Who will calculate the Stamp Duty Land Tax (SDLT)?

Your conveyancing solicitor will help you calculate the SDLT.  NB it is YOUR responsibility to ensure the correct amount is paid as it is a tax personal to you as the buyer of land or buildings.

Whose responsibility is it to pay (Stamp Duty) SDLT?

As the buyer of the land or buildings it is ultimately YOUR responsibility to ensure that the SDLT is paid.

When do I have to pay Stamp Duty (SDLT)?

You have 14 days after completion to file an SDLT return and to pay the amount due.  If you fail to do so, HMRC can impose penalties/interest.

What happens if I don’t pay Stamp Duty (SDLT)?

HMRC may impose penalties/interest if you fail to submit an SDLT return and pay the amount due.

Are there Stamp Duty concessions for First Time Buyers?

Yes!  First time buyers currently have (as at August 2022) SDLT concessions.

SDLT bandings/rates are set by the government.

How much Stamp Duty (SDLT) do First Time Buyers pay?

The first time buyer rate is currently as follows.  NO tax is payable up to a value of £300,000.  And, a rate of 5% is then charged for any value between £300,001 and £500,000.

How do you qualify as a First Time Buyer?

To be a first time buyer you must be buying your first and only home in the UK, and have NEVER owned residential in the UK or abroad before.

What if I am buying Jointly – can I still claim First Time Buyer Relief?

To qualify for First Time Buyer relief – both/all joint owners must meet the criteria.  If they don’t, then the relief will NOT apply (despite one owner qualifying).

What are the Stamp Duty Land Tax (SDLT) rates on Second Homes?

Second home owners will pay an additional 3% over standard bandings/rates.  This applies to properties with a value of £40,000 or more.  It does not apply to caravans, mobile homes, or houseboats.

What if I own two houses for a short period – can I reclaim higher rate SDLT?

If there is a period where you have an overlap (without an intention to permanently own more than one home then you can claim concessions.  It must apply to your main residence.  You must pay the higher rate of SDLT in the first instance, and then make a reclaim when you sell the former main residence.  That sale (of your former main residence) must take place within 3 years of buying your new home, AND you submit a claim for repayment of the excess charge within 12 months of having sold that former home.

Are the Stamp Duty Land Tax (SDLT) rates the same for non UK residents?

Currently (Aug 2022) non residents may pay an additional 2% SDLT on the bandings that apply to UK residents.  This applies to properties over £40,000 in value.

When is Stamp Duty Land Tax (SDLT) NOT due?

Stamp Duty is NOT payable when:-

  • 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’)

How does my solicitor pay SDLT?

Your solicitor will get you to ‘sign off’ the agreed amount of SDLT due, and then submit on your behalf both the SDLT ‘return’ (the form declaring how much is due), and the payment itself electronically.

Want to know more about SDLT?

If this or any other article on our site has not covered the questions you have about Stamp Duty Land Tax (SDLT) – do reach out!  Our team of expert conveyancing solicitors are here to help!

Share this article...