What is Stamp Duty Land Tax?
Buying a property is a huge decision – one that requires you to spend a lot of time, money, and resources. Before you can make money out of the property, you’ll initially have to spend a considerable amount. You’ll incur the agent/legal fees and have to pay mandatory taxes such as Stamp Duty Land Tax on the property.
The Stamp Duty Land Tax, or SDLT, is a tax that is charged on buyers purchasing a piece of land or a residential property currently costing more than £250,000 in England and Northern Ireland. You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Are transferred land or property in exchange for payment
When is the Tax Payable?
The tax is triggered from the date the property possession is completed. The current Stamp Duty Land Tax threshold for residential properties is £250,000 (this changes on 1st Oct 2021) If you buy a property for less than this amount, there’s no Stamp Duty Land Tax to pay.
After the 1st Oct 2021 the threshold for residential properties will be £125,000, for non-residential land and properties it will be £150,000.
Please note: there are different rules for first time buyers, non residential properties and properties purchased by companies. For more information on this please give us a call
How much is the Stamp Duty Land Tax?
Stamp Duty is calculated on the value of the property. These temporarily reduced rates are applicable for properties bought between 1st July 2021, 2020, and the 30th September 2021.
| Purchase Price of the Residential Property | SDLT Band Rate |
| £0 – £250,000 | 0% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
| £1,500,001 and above | 12% |
Additional Properties
Any property, which is not considered your main residence, is termed a ‘second home’. And if this new property is purchased at £40,000 or more, it attracts an additional 3% surcharge (more than the SDLT rates shown in the above table). Although the stamp duty is taxed on a tiered basis, the 3% surcharge is calculated as a slab. That means the surcharge is calculated on the price of the entire property.
So taking forward the same example, if you buy a second residence at £750,000 in England or Northern Ireland, in addition to the stamp duty tax of £25,000, you’ll also have to pay a 3% surcharge. That means you’ll have to pay £22,500 as the surcharge bringing the total payable amount to £47,500.
How Do I Pay Stamp Duty Land Tax?
SDLT is paid via a tax return submitted to HMRC within 14 days of acquiring the property.
A late tax return will trigger a penalty of £100, and interest will also be charged.
How we can help
At Ormerod Rutter we have a dedicated team of specialists to deal with SDLT planning and compliance advice so if you have any questions please get in touch – 01905 777600
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