If you are planning to buy property or land in England or Northern Ireland, you may need to pay Stamp Duty Land Tax (SDLT). This tax can significantly impact your overall budget.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax is a tax that buyers must pay when purchasing property or land. It applies to freehold and leasehold purchases, including properties bought through shared ownership schemes. SDLT is not limited to homes, it also covers non-residential and mixed-use properties.
Even if you take on a mortgage or buy only a share in a property, SDLT may still apply.
When Do You Need to Pay Stamp Duty Land Tax?
You must pay within 14 days of completing the transaction. Completion is when legal ownership officially changes hands. If you miss the deadline, HMRC can charge you interest and penalties.
Most people rely on a solicitor or conveyancer to handle the filing and payment, but the legal responsibility still rests with you.
Rates for Residential Properties (Effective from 1st April 2025)
Stamp Duty Land Tax is calculated in brackets, meaning portions of your property’s price fall into different tax bands:
- 0% on the first £125,000
- 2% on the portion from 125,001 to £250,000
- 5% on the portion from £250,001 to £925,000
- 10% on the portion from £925,001 to £1,500,000
- 12% on the portion above £1,500,000
Rates for Non-Residential and Mixed-Use Properties
For commercial and mixed-use properties:
- 0% up to £150,000
- 2% from £150,001 to £250,000
- 5% above £250,000
Leaseholds may also require Stamp Duty Land Tax payments on the net present value of the rent.
Relief and Special Circumstances
First-Time Buyers
If you are buying your first home for £500,000 or less, you can claim relief:
- 0% on the first £300,000
- 5% on the portion between £300,001 and £500,000
Homes over £500,000 are not eligible for this relief.
Buying a Second Property
If you already own a home and buy another, you will pay an extra 5% on top of the standard rates. This includes holiday homes and buy-to-let properties.
Non-UK Residents
If you have not spent at least 183 days in the UK in the last 12 months, you are classed as a non-resident and will pay a 2% surcharge on residential properties.
Exemptions
Certain property transfers do not require Stamp Duty Land Tax. These include:
- Gifts (no payment involved)
- Inheritance through a will
- Transfers during divorce or dissolution
- Properties bought for under £40,000
You may still have to file an SDLT return, even if no payment is due.
How to Claim a Refund
You could be eligible for a refund if:
- You paid the 5% surcharge on a second home but sold your original home within three years
- You paid too much due to an error or missed relief
You must make claims within specific timeframes, and the process involves completing forms and providing documentation to HMRC.
How to Pay Stamp Duty Land Tax
You can pay:
- Through your solicitor or conveyancer
- Online using bank transfer or card
- By including the correct reference number for proper tracking
Make sure payment reaches HMRC within 14 days of the completion date. If that falls on a weekend or bank holiday, ensure the funds arrive the working day before.
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