Quick Guide to Stamp Duty Land Tax
They say its one of the only certainties in life, so here is our Quick Guide to tax on your new home.
What is Stamp Duty Land Tax?
How much is Stamp Duty Land Tax?
SDLT on Second Homes
SDLT for First Time Buyers
When & how do you pay SDLT?
When buying a residential property in England with a value greater than £125,000 you will be liable to pay a tax calculated on the value of the property. This tax is called Stamp Duty Land Tax or SDLT for short.
SDLT is calculated using a banding system, with different rates applied to at each new band on the property’s value.
£0 to £125,000 - 0%
£125,001 to £250,000 - 2%
£250,001 to £925,000 - 5%
£925,001 to £1,500,000 - 10%
Over £1,500,000 - 12%
For example, if you buy a Freehold house for £450,000, the SDLT you will pay is calculated as:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £200,000 = £10,000
Total SDLT = £12,500
For other purchase prices, here is a link to the Government SDLT Calculator
If you already own a property and are looking to buy another, as a second home or buy-to-let for example, you will likely be liable to pay an additional 3% on the entire value of the property.
In our previous example of a £450,000 purchase price, adding 3% takes the total from £12,500 to £26,000 – an additional £13,500.
There are exemptions available in certain circumstances, such as buying a new main residence, which are beyond the scope of this article. For more info, please see GOV.uk. You may also be able to claim the additional 3% back if you sell your original property within 3 years of purchasing your new home.
If you are a First Time Buyer purchasing a property you intend to live in as your main residence then you will likely be eligible for First Time Buyer relief on your SDLT payment. If you qualify, you will pay no SDLT on the first £300,000 of the purchase price of your new home. Everything above this will be calculated in the same way as we described before. You will not qualify for First Time Buyer relief if your new home is £500,000 or more.
Don’t worry, your conveyancing solicitor will calculate the amount of SDLT due and request funds from you for this accordingly. They will submit a Stamp Duty Land Tax return on your behalf when the transaction is due to legally complete.
We hope this has been a useful Quick Guide to SDLT for you. For more information please get in touch with us as we can connect you with one of our panel IFA’s or Solicitors who will be happy to give you free advice on your individual circumstances.
Oh and before we go, keep an eye out for deals on the Robertson Homes development you’re interested in – we may just be offering to pick up the SDLT tab for you!