Who pays Stamp Duty Land Tax and how much is levied?

by Iain Mason

While some homeowners and property investors may be waiting to find out what happens in the Budget before going ahead with a purchase, nonetheless the housing market is still active. People are still buying and selling, and therefore Stamp Duty Land Tax is still being collected for the Government.

So, while we await news of changes to SDLT – if, indeed, any changes are made – here is a rundown on the current tax regime and rates.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax – SDLT – is levied on property sales and paid by the property purchaser. Successive governments have liked to tweak the regime.

You pay SDLT at the following rates if, after buying the property, it is the only residential property you own. You usually pay 5% on top of these rates if you own another residential property.

Up to £125,000                                                                                  0%

Between £125,001 and £250,000                                                 2%

Between £250,001 and £950,000                                                 5%

Between £950,001 and £1.5m                                                        10%

Anything above £1.5m                                                                       12%

For example, if you buy a house for £295,000. The SDLT you owe will be calculated as follows:

• 0% on the first £125,000 = £0
• 2% on the second £125,000 = £2,500
• 5% on the final £45,000 = £2,250
• Total SDLT = £4,750

SDLT for first-time buyers

You can claim a discount (relief) if the property you buy is your first home. You are eligible if you and anyone else you are buying with are first-time buyers.

The rates are

• no SDLT up to £300,000
• 5% SDLT on the portion from £300,001 to £500,000

If the price is over £500,000, you cannot claim the relief and the rules for people who’ve bought a home before then apply.

SDLT if you own more than one property

If you buy another property, and therefore own more than one property (i.e. you are a second home owner) you’ll usually have to pay 5% on top of SDLT rates.

SDLT rules for purchases by companies

Stamp Duty Land Tax is charged at 17% on residential properties costing more than £500,000 bought by certain corporate bodies or ‘non-natural persons’. These include:

• companies
• partnerships where one or more of the partners is a company
• collective investment schemes

The 17% rate does not apply to residential property bought by a company that is acting as a trustee of a settlement.

At Optimum, we specialise in property law and can help with the conveyancing for your residential or commercial property purchase. Please get in touch with the legal team for help and advice.