Stamp Duty Land Tax (SDLT) was introduced in December 2003 and replaces the old stamp duty on purchases of flats, houses and other land and buildings. SDLT is payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold. Higher percentage SDLT rates apply to higher-value transactions and can also vary depending on whether the property is being used for residential or non-residential purposes, and whether the property is sold as freehold or leasehold.
What are the current SDLT rates and thresholds for freehold residential property?
For purchases of freehold residential property and land valued at:
- less than £125,000, you do not have to pay SDLT;
- between £125,000 and £250,000 you have to pay SDLT at 1% of the purchase price;
- between £250,000 to £500,000 you have to pay SDLT at 3% of the purchase price;
- over £500,000 you have to pay SDLT at 4% of the purchase price.
A new 5% rate for purchases above £1m will come into force starting 6 April 2011.
Note also that between 25 March 2010 to 24 March 2012, first-time buyers do not have to pay SDLT on residential property and land valued at under £250,000.
In addition, you may qualify for "Disadvantaged Areas Relief", which exempts you from paying SDLT on property/land valued under £150,000. You can check whether any property you're interested in qualifies for this exemption on HM Revenue & Customs website.
You should also visit HM Revenue & Customs to learn about the other SDLT reliefs available, such as the relief for zero-carbon homes valued at under £500,000.
Are there any SDLT exemptions?
Yes, some land and property transactions are completely exempt from SDLT regardless of their value. These include:
- transactions where no money changes hands;
- property that's left in a will;
- transfers of property in a divorce or when a civil partnership is dissolved.
Can I avoid paying stamp duty?
If the purchase price is below the threshold amount, then you can avoid paying SDLT. The purchaser and seller can agree a price that falls just below the threshold, and the purchaser can pay an additional sum for 'fixtures and fittings', which could include things like curtains, carpets or white goods. Be warned, however, that HM Revenue & Customs regularly checks these transactions and will challenge any that arouse suspicion.
** Additional Information & Advice **
Alternatively, you may want to speak with a conveyancing solicitor. You can find a solicitor in your area for free via solicitor matching services, which can also help you to understand the best course of action and whether you are ready to hire a solicitor.