Stamp Duty Land Tax (SDLT)
What is it?
Stamp duty land tax, commonly referred to just as stamp duty, is a tax levied when you purchase land.
Technically the tax you pay when you buy land is ‘stamp duty land tax’ but this is commonly referred to simply as stamp duty.
Higher rates of stamp duty were introduced by the government from April 2016 in relation to second properties, for example buy to let properties and second homes (see below).
Will I have to pay it?
Subject to the rules on second homes below, if you buy a residential property and the purchase price is £250,000 or less you don’t pay stamp duty. If the purchase price is greater than £250,000, you will have to pay stamp duty. The amount of tax to be paid is based on a percentage of the purchase price. The relevant rates [as at 30th October 2024] are contained in the table below:
The rates apply only to that part of the property price that falls within each band. 0% is paid for the first £250,000 then 5% on the portion up to £925,000 then 10% up to £1.5 m and 12% on anything above that. So, for example, on a £1.000,000 property the tax to pay would be £0 on the first £250k (0%), £33,750 on the portion up to £925,000 (5%) and £7,500 on the remaining £75K (10%) = £41,250.
From I April 2025 the zero percent threshold will drop to £125,000 except for first time buyers where the threshold will be £300,000:
Stamp duty on second properties
If your purchase will result in you (and your spouse or civil partner between you) owning a legal interest in two residential properties or more (anywhere in the world), then the higher rates of stamp duty apply, with a surcharge of 5% on top of the standard rates set out above.
As an example, if a second property is purchased at £300,000 then the stamp duty payable is £17,500, being charged at 5% on the first £250,000 (£12,500) and 10% (£5000) on the amount above that figure.
There are exceptions where a property is being bought to replace an existing main residence, including provisions for reclaiming higher rate tax where an existing main residence is sold after the new purchase.
If you would like further information or advice please contact Anthony, Karen, Michelle, Jodie or Sandeep on 01752 668246 or send an email by clicking here.
