Stamp Duty Land Tax (SDLT)September 1, 2014 10:40 am
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is generally payable on the purchase or transfer of property or land in the UK where the amount given is above a certain threshold. Most UK land and property transactions must be notified to HM Revenue & Customs (HMRC) on a Stamp Duty Land Tax return within a certain time limit – even if no tax is due.
Various rules apply for working out how much, if any, SDLT is payable. The calculation – which is based on a value called the ‘chargeable consideration’ – can vary depending on whether the land is residential or non-residential, freehold or leasehold, or on other factors such as whether several transactions are linked.
There are also some types of transactions that are exempt from SDLT, or where reliefs can reduce the amount payable.
Broadly speaking, SDLT is charged as a percentage of the amount given for property or land when it is bought or transferred – unless there is a relief or exemption.
Higher percentage SDLT rates apply to higher-value transactions. The amount payable can also vary depending whether the property is being used for residential or non-residential purposes, and whether the property is sold as a freehold or leasehold.
What amount is SDLT charged on?
SDLT is charged on the total amount of what’s known as ‘the chargeable consideration’. The chargeable consideration includes everything of economic value given in exchange for the property – so as well as a payment of money, it can include a release from a debt, the transfer of an existing mortgage, or the provision of other services.
Most residential property purchases
For a straightforward residential property purchase, calculating SDLT is usually easy. The chargeable consideration is simply the purchase price (excluding the value of any extras such as carpets or furniture which are not counted as fixtures and fittings) so you apply the relevant SDLT threshold and rate to the purchase price.
Other types of transaction or new leases with significant rent
Calculating SDLT for other types of transaction or for new leases can be a bit more complicated. In these cases HMRC provides online calculators to help you.
Below sets out the rates at which SDLT is charged relative to the value of residential property. The rates for commercial property are largely the same except that the 1% charging rate does not apply until the value is over £150,000.
- Up to £125,000 – Zero
- Over £125,000 to £250,000 – 1%
- Over £250,000 to £500,000 – 3%
- Over £500,000 to £1 million – 4%
- Over £1 million to £2 million – 5%
- Over £2 million – 7%
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