Stamp Duty or Stamp Duty Land Tax (SDLT) as it is properly known is a tax charged on land and property transactions in England, payable by the buyer (other taxes are in place for the rest of the UK).
SDLT is a progressive tax on the purchase price of a property and is charged at different rates depending on the portion of the purchase price that falls within each rate band. The tax that is charged depends on both the purchase price and the nature of the buyers.
On the 8 July 2020 the SDLT threshold increased from £125,000 to £500,000 and reduced rates have now been put in place until the 30 September 2021. These rates apply whether you are buying your first home or have owned property before and replace the special rules for first time buyers that were introduced in 2017. Different rates apply to purchasers of residential property in England and Northern Ireland who are not resident in the UK.
Rates from 8 July 2020 until 30 June 2021
From the 1 July 2021 until the 30 September 2021 the SDLT threshold will decrease from £500,000 to £250,000.
Rates from 1 July 2021 until 30 September 2021
From the 1 October 2021 the SDLT threshold will decrese from £250,000 and return to its original threshold of £125,000.
Rates from 1 October 2021
Since 1 April 2016, additional SDLT has been payable in respect of “additional properties”, such as buy-to-lets and second homes. The 3% higher rate for purchases of additional dwellings applies on top of the revised standard rates for the period 8 July 2020 to 31 March 2021.
Since 1 April 2021 different SDLT rates apply to non-UK residents purchasing both freehold and leasehold property. The surcharge applies to all ‘non-resident transactions’, even if you intend to live in the property you’re buying, and regardless of whether or not you already own a residential property.
Rates from 1 April 2021
A calculator is available on the gov.uk website which calculates the amount of SDLT due on purchases of additional residential properties here.
However, it should be noted that where the buyers of a residential property include particular types of commercial or corporate entities SDLT is charged differently. See the HMRC website for further information.
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 firstname.lastname@example.org 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.