HMRC SDLT: SDLTM13000 – Calculation of stamp duty land tax
Principles and Concepts of SDLT Calculation
This section of the HMRC internal manual provides guidance on the calculation of Stamp Duty Land Tax (SDLT). It outlines the principles and concepts necessary for determining the correct amount of SDLT payable on property transactions.
- Explanation of SDLT rates and thresholds.
- Details on exemptions and reliefs available.
- Guidance on calculating SDLT for different types of property transactions.
- Instructions for using the SDLT calculator tool.
- Clarification on recent legislative changes affecting SDLT.
Read the original guidance here:
HMRC SDLT: SDLTM13000 – Calculation of stamp duty land tax
Calculation of Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is a tax that people pay when they purchase property or land in England and Northern Ireland. The amount of SDLT paid depends on the price you pay for the property, and different rules apply depending on whether you are a first-time buyer, buying an additional property, or purchasing a property for a business. This article outlines the main concepts for calculating SDLT.
What is SDLT?
SDLT is a tax levied on residential and non-residential property transactions. It helps fund various government services and projects. Understanding how SDLT works is essential when buying property, as this will affect your overall costs.
Factors Affecting SDLT Calculation
Several factors play a role in how much SDLT you will pay:
- Property Price: The total price you pay for the property is the main figure for calculating SDLT.
- Property Type: Different rates apply for residential and non-residential properties.
- Buyer Type: First-time buyers, landlords, and businesses may face different rates and exemptions.
Residential vs. Non-Residential Properties
Understanding the difference between residential and non-residential properties is vital:
- Residential Properties: These include houses, flats, and similar types of dwellings. They are subject to specific SDLT thresholds and rates.
- Non-Residential Properties: These consist of commercial properties such as shops, offices, and land that isn’t used for housing. They follow different SDLT calculations and rates.
Standard Residential SDLT Rates
The SDLT rates for residential properties are tiered, meaning you pay different rates on portions of the property’s price. Here’s how the rates currently break down for buyers:
- 0% on properties costing up to £250,000.
- 2% on the portion from £250,001 to £925,000.
- 5% on the portion from £925,001 to £1.5 million.
- 10% on the portion from £1.5 million to £2 million.
- 12% on properties costing over £2 million.
For example, if you buy a property for £300,000:
1. The first £250,000 incurs no SDLT.
2. The remaining £50,000 is charged at 2%, which equals £1,000.
So in this case, your total SDLT would be £1,000.
First-Time Buyer Relief
First-time buyers may be eligible for relief on SDLT. The relief applies to properties valued up to £500,000:
- If you buy a property up to £300,000, you pay no SDLT.
- If the property price is between £300,001 and £500,000, you will pay 5% on the amount over £300,000.
For example, if a first-time buyer purchases a property for £400,000:
1. No SDLT on the first £300,000.
2. The next £100,000 is charged at 5%, which equals £5,000.
Thus, a first-time buyer would pay £5,000 in SDLT for a £400,000 property.
Additional Property Purchase
If you buy an additional property (like a second home or buy-to-let), you may need to pay an extra 3% on top of the standard rates. This applies if the property price exceeds £40,000:
- 0% on properties costing up to £250,000.
- 5% on the portion from £250,001 to £925,000.
- 10% on the portion from £1.5 million to £2 million.
- 15% on properties costing over £2 million.
For example, if you buy an additional property for £300,000:
1. The first £250,000 incurs no SDLT.
2. The remaining £50,000 is charged at 5%, plus the additional 3% on the entire purchase price, which equals £9,000 in total.
So, if you buy an additional property for £300,000, you will pay £9,000.
Commercial Property SDLT Rates
The SDLT rates for non-residential properties differ from those for residential properties:
- 0% on properties costing up to £150,000.
- 2% on the portion from £150,001 to £250,000.
- 5% on properties priced over £250,000.
For example, if a commercial property costs £300,000:
1. The first £150,000 incurs no SDLT.
2. The next £100,000 is charged at 2%, which equals £2,000.
3. The final £50,000 is charged at 5%, which equals £2,500.
Therefore, the total SDLT would be £4,500.
Lease Premiums and SDLT
When dealing with leasehold properties, you may encounter lease premiums. A lease premium is a one-off payment made for the right to occupy a property for a set period.
- If you pay a lease premium, SDLT will apply. You calculate the SDLT in similar tiers as described for residential properties.
- The premium paid, combined with the rent agreed upon, will factor into the total SDLT calculation if the rent exceeds £1,000 per year.
Calculating Rent for SDLT
If the property’s lease involves rent, this impacts the SDLT calculation:
- Annual rent over £1,000 is subject to SDLT.
- The rent amount influences the calculation by affecting the total value of the lease when multiplied across the lease period.
For example, if the total rent for a 10-year lease amounts to £2,000 per year, you calculate SDLT based on the present value of that rent. This amount will be added to any lease premium.
Using SDLTM Codes for Reference
The HMRC has a series of codes related to SDLT that help navigate its rules. You can find important guidance on specific codes that outline different aspects of SDLT:
Filing and Payment of SDLT
It is important to file your SDLT return correctly and pay any tax owed promptly. You must file your SDLT return within 14 days of the completion of the property transfer.
- Failure to file or pay on time could result in penalties or interest charges.
- You can file your return online through the HMRC website or use approved software.