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Stamp Duty Land Tax (SDLT)

How much stamp duty will you pay when buying a property?

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Stamp Duty Land Tax (SDLT) is charged on property transactions in the UK where the value is above certain thresholds.

(If you purchase a property in Scotland, you no longer pay SDLT, instead, you pay Land and Buildings Transaction Tax)

(If you purchase a property in Wales, you no longer pay SDLT, instead, you pay Land Transaction Tax)


To assist people in calculating their SDLT liability, HMRC provides an online calculator. Whilst this may be useful for the most basic of transactions, the calculator is far too blunt a tool to be of use for a large proportion of property transactions.


SDLT is charged either at residential property rates or at non-residential property rates. Where a transaction involves a residential property and its grounds (but nothing else) the residential rates apply. If the transaction involves commercial property or property which is part residential and part commercial (known as mixed use) the non-residential rates apply.

The current residential rates of SDLT on property completions from 23rd September 2022 are as follows:

* There is a 3% surcharge over and above these rates for certain transactions. This includes the purchase of a second homes or a replacement main residence where, by the date of completion the previous main residence has not yet been sold. In the latter instance a refund of the surcharge can be claimed if the original main residence is sold within the available time limit.

* There is a 2% surcharge for property purchases where at least one of the purchasers are non-resident in the UK

Stamp Duty Land Tax on non-residential or mixed use property


When purchasing a new non-residential or mixed use property, the non-residential rates of SDLT apply.


These are:

For leasehold properties, the SDLT value is based on the rent rather than the properties actual value.

For rates of SDLT on property completions between 1st October 2021 and 22nd September 2022, they are as follows:

The effective date


This is the date that the SDLT tax liability occurs, many consider that date to be the day of completion, this could well be the case. The rules actually state that the effective day can be the date of completion, or the date on which the contract is ‘substantially performed’ whichever is earlier.


Substantial performance can be when most of the purchase price is paid, or when the purchaser has unfettered access to the land. In some cases, substantial performance could take place well before the actual date of completion, triggering a liability that the developer is not prepared for.


Owning property through a company


Purchases by Partnerships, Limited Companies and LLP’s are extremely complicated and a detailed understanding of the rules that apply in these circumstances is important to ensure that SDLT is not overpaid.


SDLT reliefs


The SDLT rules contain a number of reliefs which are available to reduce the tax liability on the acquisition of property. These reliefs are massively underused so many property buyers end up paying too much SDLT.



SDLT can be mitigated using reliefs where more than one dwelling is being purchased at the same time. It can also be reduced by correctly recognising the subject matter of transactions which are linked with each other or even by correctly identifying when property becomes residential.


The importance of correct SDLT advice


As SDLT rates rise the tax liability forms a greater and greater part of the purchase cost. The rules provide for a number of reliefs from SDLT which, when correctly applied, can substantially reduce that tax liability. Obtaining correct specialist advice is vital.


At Friend Partnership we have many years’ experience in advising our clients on SDLT and have a very detailed knowledge of the rules, reliefs and potential pitfalls.

Make A General SDLT Enquiry

KNOWLEDGE BASE

26 Mar, 2024
The upcoming changes will mean that from 1 October 2024, an estimated 132,000 businesses will be exempt from non-financial reporting requirements.
14 Mar, 2024
The UK's tax system for individuals classed as "not UK domiciled" (often called "non-doms") is undergoing a significant overhaul. This system has traditionally offered tax advantages for foreign income and gains, but those benefits are coming to an end. Non-domiciled individuals are generally those who haven't established strong ties to the UK in terms of residence or family connections. Previously, they enjoyed a tax perk known as the "remittance basis of taxation." This allowed them to avoid paying UK income tax on foreign income and capital gains, as long as the money remained outside the UK. However, these advantages have been gradually restricted in recent years. The new reforms, announced by the Chancellor of the Exchequer – Jeremy Hunt, represent a change to the existing non-dom tax system. The New System - What Does it Mean Non-Doms in the Future? Starting April 6th, 2025, a new system will be in effect. Here's what it entails for non-domiciled individuals who become UK resident after that date: Temporary Tax Exemption: If you haven't been a UK resident in the past 10 years and become one after the reform, you'll benefit from a temporary tax exemption. This means your foreign income and gains will be exempt from UK income tax for the first four years of your UK residency. Standard Taxation After Four Years: After the initial four-year grace period, your foreign income and gains will be taxed on the same basis as other UK residents. To avoid double taxation, relief will be available against UK tax under Double Tax treaties or the Unilateral system for any foreign tax already paid. What about Existing Non-Doms? The government acknowledges the complexities of transition for current non-dom who are UK residents. Transitional rules are being considered to ease the shift. These may include: Reduced Tax Rate for Bringing Foreign Income to UK: Existing non-doms might be offered an opportunity to bring previously untaxed foreign income and gains back to the UK at a reduced tax rate. Rebasing Foreign Assets for Capital Gains: There's also a possibility of "rebasing" the value of non-domiciled individuals' foreign assets for capital gains tax purposes. This could mean using the asset value in 2019 as a baseline, potentially reducing their future capital gains tax liability. Uncertainties and Taking Action The details of the new system and the transitional rules are still under development. The full picture will become clearer when the government publishes further consultations later in the year. Given the complexities involved, it's crucial for individuals who might be affected by these reforms to seek professional tax advice. Understanding the opportunities and potential pitfalls of the new system can help you make informed decisions about your financial future. While the non-dom tax reform simplifies matters to a certain extent, it introduces new considerations for individuals with international finances. Staying informed and seeking professional guidance will be key to navigating these changes effectively.

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