SDLT is a progressive tax – meaning it is organised into “bands”. The rates of tax payable on your property transaction depend on the price of the property. For information, the online SDLT calculator on the HMRC website can be found here (although HMRC states this calculator is only correct for standard transactions).

The rate of SDLT you pay depends on the type of property, and whether it is residential or non-residential or mixed-use. This page deals only with residential property only.

There are different rates of SDLT payable (and different reliefs may apply) if the property is going to be owned by a Limited Company or other legal entity. Please contact us if you wish to discuss purchasing or transferring property into a Limited Company or other legal entity.

For residential properties, owned by individuals, there are several rate bands for SDLT, and the tax is calculated on the part of your property price that falls within each band.

The Chancellor updated the SDLT thresholds in his budget of 23 September 2022. These are now as follows:

  • 0% on the first £250,000
  • 5% on the property price between £250,001 and £925,000
  • 10% on the property price between £925,001 to £1,500,000
  • 12% on the property price of £1,500,001 and over

Example: If you purchase a property for £350,000, you will pay the following:

  • Nothing on the first £250,000
  • 5% on the amount over £250,000 (£100,000) which equals £5,000

So the stamp duty you pay on a property with a purchase price of £350,000 would be £5,000.

First Time Buyers

The SDLT rates are slightly different for first-time buyers. The Chancellor updated the SDLT thresholds in his budget of 23 September 2022. These are now as follows:

Provided that:

  • The buyer (or both or all of the buyers if more than one) has (or have) not previously owned an interest in a property, whether by way of purchase, inheritance or by benefitting under a trust which owns or owned property
  • The property is being purchased for use as the main residence of the buyer (or buyers)
  • The purchase price is £625,000 or less, and
  • Completion of the purchase takes place on or after 23 September 2022 then:
    • No SDLT will be payable on the first £425,000 of the purchase price, and
    • SDLT will be payable at the rate of 5% on the amount of the purchase price between £425,001 and £625,000.

Higher Rates of SDLT

Higher rates of SDLT apply to most purchases of additional residential properties in England AND Wales where, at the completion of the transaction, individual purchasers own more than one residential property worth £40,000 or more and are not replacing their main residence.  The higher rates also generally apply to purchases of residential properties by companies.  The vast majority of transactions, such as First-Time buyers purchasing their first property, or homeowners moving from one main residence to another will be unaffected and will pay SDLT at the standard rates above.

The Government treats married couples and civil partners living together as one unit.  This means that all property owned by either partner outright, as beneficiaries under a trust, owned by a partnership, or any inherited or gifted property (or either partner has minor children who hold or have the benefit of any property) will be relevant when determining if an additional property is being purchased or not.

Therefore, an individual buying a property may be liable for the higher rates if his or her spouse or civil partner/children of either has an existing residential property

The higher rate is three percent higher than the current SDLT rate above, as follows:

BandExisting SDLT Rates (%)Higher SDLT Rates (%)
£0 to £250,0000%3%
£250,001 to £925,005%8%
£925,001 – £1,500,00010%13%
£1,5000,001 and above12%15%

 

If you purchase a second property for £350,000, you will pay the following:

  • 3% on the first £250,000 which equals £7,500
  • 8% on the amount over £250,000 (£100,000) which equals £8,000

So the stamp duty you pay on a property with a purchase price of £350,000 would be £15,500.

In certain circumstances, if you have paid the higher level of SDLT because you have additional property at the time of completion, you may be able to claim back some of the SDLT that you have paid if you sell your main residence within 3 years of the date of completion. We will advise you if this is applicable to you on completion and send you your SDLT Unique Transaction Reference Number to enable you to make the claim for the tax back with your advisers at the appropriate time.

Non-UK Residents

2% Stamp Duty Land Tax additional surcharge has been introduced for non-UK resident buyers on the purchase of residential property in England.

The surcharge will be in addition to the existing 3% Higher Rate SDLT mentioned above, and the existing SDLT rates referred to above. The surcharge applies to each person who is buying the property. If any of you individually are non-UK resident in relation to the transaction, then all buyers are treated as non-UK resident in relation to the transaction. If you are married or in a civil partnership and you are buying property together then – as long as you are not separated and neither of you is acting as a trustee of a settlement – if one of you is UK resident in relation to the transaction, then you are both treated as UK resident in relation to the transaction.

If the residence test has not been met at the point of completion, the 2% surcharge must be paid to HMRC no later than 14 days from the date of completion (and as above, we make all payments within 11 days of completion). If you pay the non-UK resident surcharge but then satisfy the residence conditions in the 12 months following the transaction, you may be entitled to a refund.  You have two years from the date of completion to amend your SDLT Return to reclaim the surcharge. As above, we will send you your SDLT Unique Transaction Reference Number on completion, to enable you to make the claim for the tax back with your advisers at the appropriate time.

An individual is UK resident for these purposes where they have spent 183 days in the UK (judged by their location at midnight) over any consecutive 365-day period beginning 12 months before the transaction and ending 12 months after it. This is different to the UK’s statutory residence test which is based on how much time an individual spends in the country during a tax year. So, an individual may be regarded as UK resident for income tax purposes but non-resident for SDLT purposes.

Please note that we are not specialists in SDLT, because it is a tax.  Any complex issues may need to be referred to your accountant for specialist advice. 

SDLT is a complex subject, and it is impossible to explain all possible scenarios. If you have any questions about SDLT now or at any point throughout a transaction, please do not hesitate to contact us to discuss them.

Why do I have to pay Stamp Duty?  When you buy a property the change of ownership of the property has to be registered at the Land Registry. The registration process requires a certificate which is issued by Her Majesty’s Revenue and Customs (HMRC). HMRC will only issue this certificate on receipt of the Stamp Duty due on the purchase price of the property.

Payment of Stamp Duty: Your lawyer* will send your Stamp Duty payment to HMRC on your behalf as part of the process of buying your property.  You will need to ensure the money to pay your Stamp Duty has been credited to your lawyer’s bank account before completion. More information on this can be found here.

We have put together a Guide to Moving Home, a PDF copy of which you can download by clicking here. The Guide covers everything you need to know about the buying and selling process. Alternatively contact us here or email movinghome@tsplegal.com to request your free, no obligation, quotation.

*The term Lawyer is used to define anyone involved in the conveyancing process including Solicitors and Licensed Conveyancers.