Read the original guidance here:
HMRC SDLT: SDLTM00010 – Introduction to Stamp Duty Land Tax (SDLT)

SDLTM00010 – Introduction to Stamp Duty Land Tax (SDLT)

What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax (SDLT) is a tax that you need to pay when you buy a property or land in England and Northern Ireland. The amount of tax you owe depends on the price you pay for the property. The tax is calculated based on various fixed rates, so it is important to understand how these rates work in order to know what you owe.

Key Points about SDLT

• Applicable Locations: SDLT is applicable only in England and Northern Ireland. If you are buying property in Scotland, you will pay Land and Buildings Transaction Tax instead. For transactions in Wales, Land Transaction Tax applies since 1 April 2018.
• Purchase Price: The amount of SDLT you pay is based on the purchase price of the property. Different rates apply for different price brackets.
• Tax Rates: The rates of SDLT are tiered. That means you only pay the higher rate on the portion of the purchase price that falls into a higher bracket.

When does SDLT apply?

SDLT applies when you buy a property or land over a certain price threshold. This threshold can change, so it’s important to check the latest information from HM Revenue and Customs (HMRC).

You should also be aware of the types of transactions that may incur SDLT:

• Buying freehold property
• Buying a leasehold property
• Purchasing land

Rates of SDLT

The SDLT rates are progressive, meaning they increase with the property price. For example:

• For properties worth up to £125,000, the SDLT rate is 0% (meaning you pay no tax).
• If the property price is between £125,001 and £250,000, the rate is 2% on the amount above £125,000.
• For properties over £250,000, different rates apply for each portion of the price.

It’s helpful to remember that if your property purchase price is £300,000, your SDLT calculation would look something like this:

• 0% on the first £125,000 = £0
• 2% on the next £125,000 (£125,001 to £250,000) = £2,500
• 5% on the portion over £250,000 (£250,001 to £300,000 = £50,000) = £2,500

So, in total, you would pay £5,000 in SDLT for a property costing £300,000.

Temporary Reduced Rates

In certain situations, there may be temporary reductions in SDLT rates, which is important to know when you’re considering a property purchase. These temporary rates have been introduced in response to the ongoing economic situation, aiming to support buyers and maintain activity in the property market.

You will need to check the most up-to-date information to see if reduced rates apply at the time you make your purchase.

Who is liable to pay SDLT?

The purchaser of the property is responsible for paying SDLT. This means that as the buyer, you need to ensure that the tax is settled with HMRC within a specific time frame (typically within 14 days of the purchase completion).

If someone else is buying the property on your behalf, they are still liable for the SDLT as the purchaser. It is important to ensure that everyone involved understands their responsibilities regarding SDLT.

How to Pay SDLT

Paying SDLT is a straightforward process:

• As the buyer, you need to submit an SDLT return to HMRC.
• This return usually needs to be submitted within 14 days of the transfer of the property.
• You can pay the SDLT through various methods, including online via the HMRC website or by bank transfer.

It is important to keep records of the return and payment for future reference, as HMRC can request evidence of payment. Not paying on time may lead to penalties or interest charges.

Additional Considerations

There are exemptions and reliefs available that might apply to you, which can reduce your overall SDLT liability. Some examples include:

• First-time Buyers Relief: If you are a first-time buyer, you may qualify for relief that allows you to pay less SDLT, especially if your property is under a certain price.
• Property transfers: If you are transferring property, SDLT may not apply, or a reduced rate may be relevant, such as for trust or family arrangements.

Make sure to examine all potential reliefs to determine what you may be eligible for when making a property purchase.

Important Changes to SDLT

Since April 2015, SDLT has undergone changes. Notably:

• In Scotland, SDLT does not apply to land transactions. Instead, these transactions are now taxed under the Land and Buildings Transaction Tax.
• From 1 April 2018, any land transactions in Wales are subject to the Land Transaction Tax administered by the Welsh Revenue Authority.

With these changes, if you are involved in property transactions in Scotland or Wales, you need to be aware that different sets of tax rules will apply compared to those in England and Northern Ireland.

If you’re looking for further information regarding the changes and how they might affect you, you can find guidance on the respective government websites.

Contact for More Information

If you have questions or need more information about SDLT, you should contact HMRC. They provide the guidance necessary for understanding the ins and outs of the tax legislation as it relates to your specific situation.

For detailed information or specific inquiries, the HMRC contact service can provide assistance.