If you are planning to buy a property in the UK then you should be prepared to pay Stamp Duty Land Tax (SDLT) on the purchase. You pay this tax on the purchase of any house, flat, other building or land above a certain value.
Our guide looks at what Stamp Duty Land Tax is, when you pay it and how much you have to pay.
What is Stamp Duty Land Tax?
SDLT is a tax that you pay on the purchase price of property and land. It was introduced in December 2003 to replace its predecessor, Stamp Duty. You may have to pay SDLT when you take on a lease or when you buy a property in the UK.
When is Stamp Duty Land Tax payable?
Generally speaking, you will pay SDLT if you buy a leasehold or freehold property and the purchase price is more than £125,000.
If the property or land you buy is under £125,000, no SDLT will be payable.
If you are a first time buyer then the threshold for paying SDLT is higher. If you have never owned a flat or house anywhere in the world (including the UK) then you will only pay Stamp Duty Land Tax if the purchase price of the property is over £250,000. The higher threshold applies for any purchases made between 25 March 2010 and 25 March 2012.
What Stamp Duty Land Tax will I pay?
The amount of SDLT that you pay is dependent on the purchase price of the property:
- Between £0 and £125,000 – 0 per cent
- £125,001 to £250,000 – 1 per cent (unless you are a first time buyer in which case the rate is 0 per cent as above)
- £250,0001 to £500,000 – 3 per cent
- £500,0001 to £1 million – 4 per cent
- £1 million or more – 5 per cent
The tax is not staggered. For example, if you buy for £300,000, you don’t pay 1 per cent on the first £250,000 and then 3 per cent on the remaining £50,000. You pay 3 per cent of the £300,000 purchase price as SDLT.
What is SDLT Disadvantaged Areas Relief?
If you buy a property in an area that has been designated as ‘disadvantaged’ by the government then you may qualify for Disadvantaged Areas Relief. This means that you don’t pay any SDLT on a purchase of up to £150,000.
You can determine whether the area you are buying in is deemed ‘disadvantaged’ by checking on the HM Revenue and Customs (HMRC) website.
What if I am buying a ‘zero carbon’ home?
If you are buying a house which has sufficient additional renewable power to cover the average consumption of a property in a year – highly insulated and including renewable energy sources such as solar panels or a wind turbine – you will not have to pay any SDLT on purchases up to £500,000.
Zero carbon homes bought for over £500,000 will have their SDLT bill reduced by £15,000.