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Stamp Duty Land Tax Summary

Stamp Duty Land Tax Summary

Previously, stamp duty land tax (SDLT) was based on a slab system where a single universal rate was applied to the entire property price. However, the new SDLT is based on a more progressive system where buying an additional property would incur an extra SDTL charge on any property priced greater than £40,000.

The newly revised Stamp Duty Land Tax (SDLT) is applied to all property or land which is priced above the current SDLT threshold of £125,000 for residential properties and £150,000 for non-residential land/properties located in England, Wales and Northern Ireland. For property/land located in Scotland, the SDLT does not apply; the Land and Buildings Transaction Tax is incurred instead.

Residential Property

When you buy a residential property, stamp duty land tax (SDLT) is applied progressively on increasing portions of the property price which is above £125,000. In scenarios where a buyer currently owns an existing home of residence; an extra 3% is applied on top of the normal rates of SDLT for all additional residential properties. However, it is worth noting that if you’re buying a residential property with the intention to replace your main place of residence, the extra 3% SDLT will not apply. Timing is important here and it can get complicated. We recommend reading further governmental handbooks to establish relevant timescales if this of relevance to you.

Table 1 provides an outline of SDLT rates for residential property.

Non-Residential Property and Mixed-Use Land/Property

Similarly, stamp duty land tax (SDLT) is progressively applied to increasing portions of commercial property priced above £150,000. Table 2 provides an outline of SDLT rates with regards to commercial property.

Payment of SDLT

From the date of sale completion of a property (where all contracts are signed, dated and keys are provided); you will have 30 days to pay the required stamp duty or transaction tax. If you miss this 30-day deadline, you will face a fine and potentially interest on top. When seeking to a buy property, ensure you have worked out the required SDLT and have the required cash buffer to pay this off within 30 days.

Conclusion

As shown, SDLT is subject to change every year. When seeking to buy a property, use a SDLT calculator to provide an estimation of your SDLT bill. Several examples of these are provided below within the list of references.

Sources of information:

  1. https://www.gov.uk/stamp-duty-land-tax
  2. http://www.knightfrank.co.uk/stamp-duty-calculator
  3. https://www.moneysavingexpert.com/mortgages/stamp-duty
  4. https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

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