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What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is currently payable on all purchases of land or property in England and Northern Ireland valued over £125,000. 

This tax applies to residential properties and non-residential properties or land.

In Scotland you pay Land and Buildings Transaction Tax. In Wales, since 1st April 2018, you pay Land Transaction Tax. 

SDLT applies to freehold and leasehold properties. The rate you pay depends on the value of the property, whether you are a first-time buyer and, in some cases, the area in which the property is located.

If you are liable for Stamp Duty, it is paid directly to HMRC. In many cases the solicitor who is handling the purchase will deal with the Stamp Duty, although it remains your responsibility to ensure it is paid.

The current rates of Stamp Duty Land Tax are:

  • On property valued between £0 and £125,000, 0% Stamp Duty is payable

  • On the portion of the property’s value between £125,001 and £250,000, 2% Stamp Duty is payable

  • On the portion of the property’s value between £250,0001 and £925,000, 5% Stamp Duty is payable

  • On the portion of the property’s value between £925,001 and £1.5 million, 10% Stamp Duty is payable

  • On the portion of the property’s value over £1,5 million, 12% Stamp Duty is payable

The amount you pay depends on how much of the price falls into each of the SDLT categories.

First time buyers do not have to pay any Stamp Duty on properties that cost under £300,000. If your first flat or house is between £300,000 and £500,000, you are liable for Stamp Duty at 5%, for the amount over £300,000. Those buying a first home that is worth over £500,000 will be charged the standard SDLT rates.

Most property purchases are subject to Stamp Duty, including a direct property swap. Even if you swap houses with someone else and no money is changing hands, both parties involved need to pay SDLT on the value of the property they are moving to.

There are sometimes other SDLT rates available for very particular circumstances, such as zero carbon homes or buildings in areas that are classified as disadvantaged. Also, if there is a transfer of property between two people. This usually happens if someone bequeaths a share of property to someone after their death. Also, during divorce proceedings when one party transfers their share of a home to the other. If you find yourself in any of these situations, it is wise to get professional advice from HMRC or a solicitor.

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