Read the original guidance here:
HMRC SDLT: Stamp Duty Land Tax Changes in Scotland and Wales from April 2015 and 2018

Changes to Stamp Duty Land Tax in the UK

From April 2015, Stamp Duty Land Tax (SDLT) does not apply to land transactions in Scotland. Instead, these transactions are now subject to the Land and Buildings Transaction Tax (LBTT). For further information, you can visit the Scottish Government’s website.

Starting from 1 April 2018, anyone involved in land transactions in Wales will need to pay Land Transaction Tax (LTT). The Welsh Revenue Authority is responsible for overseeing LTT. As a result of this change, you will no longer need to pay SDLT for these transactions or submit a return to HM Revenue and Customs (HMRC). For additional details about the transition from SDLT to LTT, you can refer to the guidance on cross-border transactions.

Understanding SDLT

Stamp Duty Land Tax (SDLT) is a tax that applies to purchases of property and land in England and Northern Ireland. The amount you pay depends on the price you agree to pay for the property. Here are some key points about SDLT:

• Thresholds: SDLT applies to transactions over a specific price. If the purchase price is below this threshold, there is no tax to pay. The current threshold can vary from year to year, so you should check the latest information.
• Rates: The amount of SDLT you pay is tiered, meaning different portions of the purchase price are taxed at different rates. For example, you might pay one rate on the first portion of the price and another on the portion above that.
• Calculation: When calculating your SDLT, you will consider the entire purchase price, but only pay the rate that applies to each band. For instance, if you purchase a property for £300,000 and the bands are structured as follows:
  • Up to £125,000: 0%
  • From £125,001 to £250,000: 2%
  • From £250,001 to £925,000: 5%

  then you would pay:

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

  The total SDLT owed would be £5,000.

Who needs to pay SDLT?

SDLT applies to most transactions where you acquire an interest in land or property in England or Northern Ireland, including:

• Purchasing a property
• Certain leases
• Exchanging ownership or inheriting land/property

However, there are exemptions. For instance, if you are purchasing land primarily for agricultural purposes or if the property is under a certain value, you may not have to pay SDLT.

Guidance for Paying SDLT

If you find that you are liable to pay SDLT, you must follow certain steps to comply:

• Valuation: Ensure the property’s price is accurate and fair to calculate your SDLT obligation correctly.
• Submit a return: You must submit an SDLT return to HMRC within 14 days of completing the purchase. Your return will detail the property price and your calculated SDLT.
• Payment: Along with your return, you must pay the SDLT you owe. This can typically be done online through HMRC’s services.

Pens for Non-Compliance

It is important to comply with SDLT regulations. If you fail to submit your return or pay the SDLT owed by the deadline, you could face:

• Penalties: HMRC may impose penalties for late submissions. These penalties can start low but increase significantly over time.
• Interest: You may also be charged interest on any unpaid SDLT from the original due date until the tax is paid in full.

What to do if You Make Mistakes

If you realize that you have made a mistake on your SDLT return or payment, it’s essential to act quickly. You can:

• Correct your return: You can amend your original return if you think you’ve calculated the amount incorrectly.
• Make extra payments: If you owe more SDLT than you initially paid, you can submit an additional payment alongside your amended return.
• Contact HMRC: If you are unsure how to proceed, it’s a good idea to reach out to HMRC for guidance.

Managing SDLT When Buying Property Together

When purchasing property with others, SDLT can be affected in different ways:

• Joint Purchases: If two or more people are buying a property together, your combined effective share could push you over the SDLT threshold, affecting the amount of tax owed.
• Gifts of Property: If you receive a property as a gift, SDLT may still apply. The market value of the property is considered for tax purposes, even if no money changes hands.
• Tenants in Common: Different ownership percentages can change how SDLT is calculated. Be sure to factor in how much of the property each person is buying.

Special Circumstances

There are specific situations that may change your SDLT obligation:

• New Build Properties: Purchasing a new build property could affect your SDLT calculations. Developers may include extra costs that you need to consider when determining the property price.
• Buy-to-Let Properties: If you’re investing in a buy-to-let property, higher rates of SDLT may apply. Extra charges are typically incurred for additional properties beyond your main home.
• First-Time Buyers: First-time buyers may be eligible for relief on the SDLT if they meet certain criteria, such as the price not exceeding a specified amount.

SDLT and Property Transfers

Transferring ownership of a property may come with its own SDLT considerations:

• Family Transfers: Moving property between family members might not incur SDLT, particularly for spouses or civil partners, as long as certain conditions are met.
• Inheritance: When you inherit property, it’s essential to ascertain the market value as SDLT may still apply based on the property’s worth at that time.
• Transfer of Leaseholds: If you are taking over a lease or transferring leases, this might trigger SDLT considerations as well.

Online Resources and Support

For further assistance with SDLT, there are several online resources available, including:

• The official HMRC website includes detailed guidance and calculators for estimating SDLT charges.
• Tax professionals can provide tailored advice based on your specific situation.
• Various property websites often include information about SDLT, especially for buyers and investors.