Stamp Duty Guide
Stamp Duty Land Tax – Why is it so complicated? Please give me some pointers!
In this guide we aim to point you in the right direction in terms or working out if you have to pay, whether you have to pay additional tax or whether you qualify for relief.
What is Stamp Duty Land Tax-is it the same as Stamp Duty? This is very confusing….
Stamp Duty Land Tax is the relatively new name for Stamp Duty. It is a tax incurred by some purchasers (most purchasers) when they buy a property. It is a complex area of taxation with some exemptions and reliefs being available in certain circumstances.
How will I know if I have to pay SDLT?
The best thing to do is check with a financial adviser-you do not want to overpay on the one hand or under-budget on the other hand.
An excellent tool to make your initial calculation may be found at
https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax
Remember to answer the questions carefully to ensure you get an accurate calculation. Please also bear in mind however, that this tool does not cover all SDLT situations which is why it is essential that you check your individual situation with a tax adviser should you have any queries.
IMPORTANT NOTE: From 1 April 2025 the rates are changing!
I have never owned property before-do I have to pay?
Good news! You may qualify for the “First Time Buyer” relief. HMRC provide useful guidance as to the requirements to qualify for this relief
Essentially First Time Buyers buying their first home for £425,000 or less will pay no SDLT. Where the price is over £425,000 but does not exceed £625,000 purchasers will pay 5% on the amount above £425,000.
However, for transactions with an effective date on or after 1 April 2025:-
- the nil-rate threshhold shall reduce to £300,000
- the FTB property eligibility shall be reduced to £500,000
I already own a house, but am buying a property which I will probably rent out or use as a second home-what is my position?
Not such good news here….If the property you are buying an additional property, if so you may have to pay a higher SDLT rate. The guidance here is quite complex and you should check with your financial/tax adviser.
Here is a link to the HMRC guidance on SDLT for you to consider. It is important to note the rules apply to each person (and their spouse) who is buying the property.
If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole.
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
I am buying a property which has a “granny annexe” for my Mum to move into? I have heard there may be a relief available.
Multiple dwellings relief is abolished and can no longer be claimed for transactions which completed, or have substantially performed, on or after 1 June 2024.
What about other reliefs? I want to make sure I do not overpay!
Here is some guidance outlining the reliefs available, which will hopefully help you, but it is essential that you check the situation with your financial/tax adviser before becoming legally committed to the purchase.
https://www.gov.uk/stamp-duty-land-tax/reliefs-and-exemptions
How is my SDLT paid? Do I have to send a cheque?
We will prepare (on the basis of the information you have provided to us) your SDLT return and submit this shortly following completion of your purchase. As part of your financial statement we will have included a sum for SDLT which you must ensure we are in receipt of in cleared funds prior to completion. Following on from submission of your return, we will usually submit the amount electronically to HMRC on your behalf. We ask for monies prior to completion as there are strict deadlines imposed by HMRC for both the submission of the SDLT return and for submission of the money. Penalties will apply if these are not dealt with on time. Further to this, we cannot register your ownership of the property without the successful submission of the SDLT return.
This guide is just a brief overview of common questions we encounter and we cannot cover everything here. Make sure you receive good tax advice before you are legally committed to ensure you do not encounter any unwelcome surprises! Please remember your quotation will be based on the “standard” SDLT rates-if you either qualify for an exemption, a relief or fall into the higher rate category please advise us as soon as possible.