What is Stamp Duty Land Tax (SDLT)?

If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on purchases of houses, flats and other land and buildings.

SDLT replaced Stamp Duty in December 2003 and is a tax on the purchase price of land and buildings. When you buy a property or take on a lease you may have to pay SDLT.

 

Stamp duty thresholds
Stamp duty exemptions
SDLT return form

 

If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and five per cent of the whole purchase price. See the table below for more detail.

If the purchase price is £125,000 or less you don't pay any SDLT.

Stamp Duty Land Tax (SDLT) thresholds

Purchase price of residential propertyRate of SDLT (percentage of total purchase price)
£0 - £125,0000%
£125,001 - £250,0001%
£250,001 - £500,0003%
£500,001 - £1 million4%
£1 million - £2million5%
£2million or more7%

You can check current rates of SDLT on the HM Revenue Customs (HMRC) website.
www.hmrc.gov.uk/sdlt

Stamp Duty Land Tax (SDLT) exemptions

SDLT Disadvantaged Areas Relief

If you buy property in an area designated by the government as 'disadvantaged' you may qualify for Disadvantaged Areas Relief. In this case the threshold for SDLT is £150,000.

You can check the HMRC website to see if the property you are buying is in an area designated as disadvantaged.
www.hmrc.gov.uk/sdlt/reliefs-exemptions

Zero-carbon homes Stamp duty relief

A zero-carbon home can be connected to mains electricity and gas but needs to have sufficient additional renewable power to cover the average consumption of a house over a year.

In order to achieve this, the fabric of the building has to be insulated and built to very high standards and the house needs to incorporate renewable energy technologies.

The house must be 'zero-carbon' over the course of the year.

In October 2007 a relief from SDLT was introduced for zero-carbon homes. All qualifying houses under £500,000 are exempt and houses bought for £500,000 or above will have their SDLT bill reduced by £15,000.

SDLT Return form

As the buyer of the property, you are responsible for completing the land transaction return and paying the SDLT. However, in practice, your lawyer will usually handle this for you and send it to HMRC on your behalf.  You should check that all the information on the form is correct and complete before signing the declaration. 

 

Related conveyancing articles:
Changes to Stamp Duty Land Tax (SDLT) | Properties over £2m taxed 7%
Government Cuts Down on Stamp Duty Avoidance
Conveyancing costs | a guide to the hidden fees your property lawyer may also charge for
Conveyancing fees - What costs to check for when receiving conveyancing quotes
First time buyers guide| Budgeting for your move
Submitting the Stamp Duty Land Tax Return Form