A commonly overlooked aspect of property and tenancy management is the need to conduct routine inspections throughout a tenancy. No matter the situation!
Stamp Duty Land Tax – Do I Pay? How Much Do I Pay? The Minefield!
What Is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a tax levied on purchasing property in England and Northern Ireland.
Stamp duty is charged at varied rates depending on the purchase price of a property, the rates rise as the purchase price of the property rises.
Changes were made in November 2017 when the new stamp duty system was amended to include first-time buyer relief. More on that will follow…
In Scotland and Wales, the type of tax you pay is slightly different.
You’ll be subject to Land and Buildings Transaction Tax (LBTT) in Scotland, and Land Transaction Tax (LTT) in Wales, instead of stamp duty.
How Much Is Stamp Duty?
Depending on your circumstances, it will vary how much you pay for Stamp Duty, or whether you need to pay any at all!
On property purchases up to £250,000, you won’t pay any stamp duty.
As an eligible first-time buyer, you’ll get relief and not pay stamp duty on properties up to £425,000, even further, a discounted rate on property purchases up to £625,000!
Stamp duty applies whether you purchase a property outright, or via a mortgage.
| Minimum Property Purchase Price | Maximum Property Purchase Price | Stamp Duty Rate % |
| £0 | £250,000 | 0% |
| £250,001 | £925,000 | 5% |
| £925,001 | £1,500,000 | 10% |
| Over £1,500,001 | NO LIMIT! | 12% |
The Stamp Duty Rate is a percentage calculated on the difference from the minimum threshold figure, for example:
If you buy a £400,000 property, you’ll be applicable to the 5% stamp duty rate.
You’ll pay 0% on the first £250,000 of the property cost, and then 5% on the difference between £250,001 and £400,000.
Working out at 5% of £150,000 being £7500.
Additional SDLT On Second Homes (Unfortunately…)
Buying an additional property, such as a second home or for investment, you’ll be liable to pay an additional 3% in stamp duty on top of the standard rates mentioned above…
This increased rate applies to all properties bought for £40,000+.
| Minimum Property Purchase Price | Maximum Property Purchase Price | Stamp Duty Rate % |
| £0 | £250,000 | 3% |
| £250,001 | £925,000 | 8% |
| £925,001 | £1,500,000 | 13% |
| Over £1,500,001 | NO LIMIT | 18% |
Note, however, it doesn’t apply to mobile homes, caravans, or houseboats!
SDLT If You’re A Non-UK Resident
As a non-UK resident purchasing a property in England or Northern Ireland, you may need to pay an additional 2% on top of the existing stamp duty rates for properties costing more than £40,000.
Have a look at the GOV.UK site for in-depth information on how this will affect you!
Refund Of Higher Rates Of SDLT
There may be a circumstance where you buy a new property, but with this came a delay in selling your previous main residence. Meaning you were liable to pay the higher rate of stamp duty as you technically own more than one property.
If you sell your previous property within three years of buying your new home you could be eligible to apply for a refund of the higher Stamp Duty Land Tax rates you paid when you purchased your new home.
You are able to request a refund for the amount above the standard rates if:
you sell your previous main residence within three years, and you claim the refund within 12 months of the sale of your last residence, or within 12 months of the filing date for your SDLT tax return, whichever comes later.
When Does SDLT Need Paying
You’ll have 14 days to file a Stamp Duty Land Tax (SDLT) return and pay any monies due.
If you don’t submit a return and pay this tax within 14 days, HMRC might charge you penalties and interest.
How To Pay SDLT
A solicitor or conveyancer will deal with the SDLT return and any payment due for you, if not, you can do it yourself.
Regardless, the responsibility for it being completed and paid on time is you.
A return still needs to be submitted, even if there is no Stamp Duty to pay…
Instances When SDLT Isn’t Payable
In some instances, Stamp Duty Land Tax isn’t payable:
- If you’re gifting a home to someone else, they won’t have to pay SDLT on the market value of the property, provided there is no outstanding mortgage on it.
If you do take over a mortgage, however, SDLT will be payable on the value of the mortgage over the standing SDLT threshold. - If the property was left under a will, it may not be subject to SDLT provided there is no other consideration given. Under this instance, there is usually no requirement to inform HMRC in this case.
- Transfer of your property in accordance with a court order during a separation, divorce, or dissolution is generally exempt.
Bear in mind that if an unmarried couple agrees to separate permanently without a court order, it will be treated as an unmarried couple for Stamp Duty Land Tax purposes.
What else?
Judging by the information I’ve given, if you fall into the category of SDLT needing to be paid, it’s impossible to get away from, get it arranged to be paid as soon as is needed!
If buying a Buy-To-Let, you’ll be very conscious of the cost you’ve incurred in the property purchase.
The best way to help this is to get a tenant in ASAP! Contact our property experts to discuss how we can best help you find tenants swiftly, for a reliable and steady rental income stream.
