What is Stamp Duty Land Tax?

If you buy land or property in the UK then unfortunately you will have to pay what is known as Stamp Duty Land Tax (SDLT). There are different rates of tax payable dependent on the value of the property being bought, whether the property is residential or non-residential and whether the property is freehold or leasehold.

What are the stamp duty thresholds?

If you bought a property between 3 September 2008 and 31 December 2009 inclusive for less than £175,000 you did not have to pay Stamp Duty Land Tax. If you paid more than £175,000 for a property then you had to Stamp Duty Land Tax at between 1% and 4% on the whole of the purchase price.

However, the government have now suspended the “holiday” and as from 1 January 2010 Stamp Duty Land Tax will be payable on residential properties with a value of £125,000 or over.

Residential properties Tax payable
Less than £125,000 0%
£125,001 to £250,000 1%
£250,001 to £500,000 3%
£500,001 and over 4%

What is a non-residential property?

This can include commercial premises such as shops, agricultural land or even six or more residential properties bought in a single transaction. Also included under this heading are mixed use properties which include both residential and non-residential elements.

What is the threshold for SDLT on a non-residential property?

Currently tax is not payable on many non-residential properties, eg agricultural land, where the value is less than £150,000. However, the rules differ if rent is payable on the property. It is worth checking with the Inland Revenue or your solicitor at the outset of your particular transaction.

How is tax calculated if I buy more than six residential properties in a single transaction?

In this case non-residential property rates and thresholds apply. Tax would be calculated on the value of each of the properties and then added together to give a cumulative total of tax payable.

Are there any circumstances in which SDLT does not have to be paid?

There are various types of exemptions and reliefs available. For example, properties which are in areas the government has designated as “disadvantaged areas” will attract relief if the value is less than £150,000 from 1 January 2010. There are approximately 2000 “disadvantaged areas” in the UK and are based on local government wards and electoral divisions.

Since we are all being encouraged to keep a closer eye on our “carbon footprint”, there is also relief for new “Zero Carbon Homes”. These are properties which have been certified as meeting specific energy efficient standards. If these standards are met then there will be no tax to pay if the property is worth less than £500,000.

Finally, there are certain types of transactions where stamp duty land tax is not payable and the Inland Revenue do not need to be notified. For example, transactions which are for no value, property left in a will, purchases of freehold property with a value of less than £40,000. Again your solicitor will advise you whether your transaction falls within this category.

The Stamp Duty Holiday Is Finally Over!