October 24, 2017
Stamp Duty Land Tax (SDLT) is a tax paid when you buy property or land in England, Wales and Northern Ireland (the rules differ in Scotland). On properties, the tax applies to those over the value of £125,000.
Stamp duty is paid when you buy a freehold property, a leasehold property, a property through a shared ownership scheme, take on a mortgage or buy a share in a house. The amount of stamp duty you pay depends on whether what you’re buying is residential, non-residential or mixed use. A stamp duty land tax return must be sent to HMRC and the tax paid within 30 days of completion, even if the value is below £125,000 and the payable amount is £0.
On residential property purchases, the SDLT rate is in four brackets. The value between £125,000 and £250,000 has a rate of 2%. Between £250,000 and £925,000 the rate is 5%. From £925,000 to £1.5m the rate is 10% and any amount above this is 12%. This functions much like income tax. This means that if your property was worth £200,000, the rate will be calculated as 2% of the £75,000 that is above £125,000, meaning a rate of £1500.
An additional 3% on top of the normal rate applies if your purchase of a residential property means you’ll own more than one property. This does not apply if the property you buy replaces you current main residence which has been sold. If there’s a delay selling your main residence, you’ll have to pay higher rates, but you may be able to get a refund if you sell the property within 3 years.
More on Stamp Duty – https://www.gov.uk/stamp-duty-land-tax