What is Stamp Duty Land Tax (SDLT)?
Stamp Duty Land Tax is a tax on property or land bought in England and Northern Ireland. You’ll have to pay it if your purchase costs over a certain price.
If you’re buying property or land in Scotland, you won’t have to pay stamp duty. Instead, you’ll have to pay a Land and Buildings Transaction Tax. If you purchased a house in Wales and the sale was completed on or after 1st April 2018, you will have to pay Land Transaction Tax.
What are the new stamp duty rules and when did they change?
As of 8 July 2020, the government has introduced a temporary holiday on stamp duty on the first £500,000 of property sales across England and Northern Ireland. This means that anyone completing on a main residence property costing up to £500,000 will not pay any stamp duty. Properties exceeding £500,000 will only be taxed on their value over that threshold. The temporary stamp duty holiday is valid on property sales between 8 July 2020 and 31 March 2021.
What were the stamp duty rates on residential properties before the stamp duty holiday?
From 1 April 2021, the government has confirmed that stamp duty rates will return to what they were before this temporary holiday was issued. From 1 April 2021, you’ll have to pay stamp duty if the residential land or property that you’re buying costs over £125,000. If you’re buying non-residential land and properties, it’s £150,000. How much you’ll have to pay for a residential property depends on what price band your purchase is in. If you’re a first-time buyer, from 1 April 2021 you may be eligible for relief – a discount meaning you will pay less or no tax – if:
- you, and anyone else you’re buying with, are first-time buyers
- the purchase price is £300,000 or less
If you’re buying a second property (for example, a second home, or an additional home to let out) you’ll have to pay an extra 3% in stamp duty. If there’s an overlap in time between selling your old home and purchasing your new one, you may still have to pay second-home stamp duty rates until your current property is sold.
Do I have to pay stamp duty?
If you complete on a sale for a main residence between 8 July 2020 and 31 March 2021, you won’t pay any stamp duty for properties up to the value of £500,000.
When the stamp duty holiday ends, you must pay stamp duty on any property or land purchase if you’re:
- Buying freehold property
- Buying a new or existing leasehold, or
- Buying a property via a shared ownership programme
You may also have to pay stamp duty if you have full or part ownership of a property or land transferred to you, for example, from marriage, civil partnership, divorce, joint ownership, inheritance or as a gift.
Stamp Duty Land Tax exemptions
- Charities may be able to get relief from stamp duty when they buy land and property for charitable purposes.
- Properties bought through Right-to-Buy initiatives may qualify for stamp duty discounts.
- Registered social landlords may be able to get stamp duty tax reductions when buying land or property.
- Zero-carbon homes (and flats) under £500,000 are exempt from stamp duty. Any valued over £500,000 will have their stamp duty bill cut by £15,000.
When do you have to pay Stamp Duty Land Tax?
If you’re planning on completing on a sale over the value of £500,000 between now and 31 March 2021, you must pay stamp duty within 14 days of completing your purchase. If you have a solicitor, agent or conveyancer, they’ll typically file the return on your behalf. Late or non-payment may incur penalties and interest on the tax.
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This article was written on 21 September 2020; all information was correct at the time of writing.
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