Stamp Duty Land Tax in UK – Everything you need to know

Stamp Duty Land Tax (SDLT) charges in the United Kingdom are more complicated than ever before.

With recent changes announced in the Budget 2018, it is important for our clients buying property in the UK to fully comprehend the charges that they will be subject to. We highly recommend getting advice regarding the rate structure and its effect on your property purchase.

SDLT Rates on any given house purchase vary significantly from 1% to 15% depending upon the circumstances, and deals are often abandoned because of overestimations of the total costs of acquisition. Miscalculations and over-payments of SDLT can occur in even the simplest circumstances. Making sure that you get it right in the first instance is much less of a headache than chasing refunds later down the line.

 

How we assist

We work with a huge board of specialist tax advisors who we will refer you to. At Enness we believe our clients need the best advice as early as possible to support their investment decisions. We have teamed up with the leading SDLT Specialists in the UK to provide a full advice and support service which includes fully indemnified advice on all tax matters affecting the acquisition of UK Property.

The statement by HMRC in June 2018 that their online calculator is, in fact, “merely for guidance” emphasised the lack of support provided to solicitors, estate agents, brokers and purchasers in dealing with this complex tax.

Don’t delay – if you have a purchase in mind, whatever the price, contact us now for a free consultation with our expert mortgage advisers to ensure that you start with the right information to support your next investment in UK property. We will also make sure to put you in contact with the right tax advisor for your needs, should you wish.

 

Below, we have broken down the facts so you can see how you will be affected by your property purchases and make sure that you won’t get caught out.

 

 

UK residential purchases:

The figures differ between sovereign nations of the United Kingdom.

  • In England and Northern Ireland
First propertyAdditional property
£0 – £125,0000%3%
£125,000 – £250,0002%5%
£250,000 – £925,0005%8%
£925,000 – £1,500,00010%13%
Over £1,500,00012%15%

If the additional property is valued at less than £40,000, there will be 0% tax.

For purchases from £40,000 – £125,000, the rate will be 3% on full purchase price.

 

 

  • In Wales:

Known in Wales as Land Transaction Tax (LTT), the charges and property values differ slightly.

First propertyAdditional Property
£0 – £180,0000%3%
£180,000 – £250,0003.50%6.50%
£250,000 – £400,0005%8%
£400,000 – £750,0007.50%10.50%
£750,000 – £1,500,00010%13%
Over £1,500,00012%15%

An additional property purchased below £40k will attract 0% tax.

For purchases from £40,000 – £180,000, the rate will be 3% on full purchase price.

 

 

  • In Scotland:

Known in Scotland as Land and Buildings Transaction Tax (LBTT), the charges and property values differ slightly.

First propertyAdditional Property
£0 – £145,0000%3%
£145,000 – £250,0002%5%
£250,000 – £325,0005%8%
£325,000 – £750,00010%13%
Over £750,00012%15%

An additional property purchased below £40k will attract 0% tax.

For purchases from £40,000 – £145,000, the rate will be 3% on full purchase price.

 

It is important to note that for first-time buyers there is no charge on properties valued up to £125,000 throughout the UK.

 

 

Second homeowners

New regulation is that individuals’ second home purchases valued at over £40,000 will be subject to 3% Stamp Duty for the full price of the property. This also counts if you own just a share in another property, if the share is more than £40,000.

A second home is considered to be an additional property to your primary residence. This rule still applies if your primary residence is overseas and your second property is in the UK, therefore foreign nationals need to be just as aware of this as UK residents.

If you sell your primary residence to move into your second property, you could be eligible for a refund of this fee upon completion of the sale of the former residence.

 

 

Commercial

Stamp duty is not paid on property valued up to £150,000. For property valued above this price, the fees are as follows:

For freehold commercial property:

£150,001 – £250,0002%
Over £250,0015%

 

For leasehold commercial property:

£150,001 – £5,000,0001%
Over £5,000,0002%

 

Mixed-use property

A mixed-use property combines residential and non-residential space. This could be a shop or office with a flat above or attached, for example. The Stamp Duty charges on mixed-use property are as follows:

£0 – £150,0000%
£150,001 – £250,0002%
Over £250,0005%

 

Enness does not offer investment or tax advice. If any part of our recommendation includes or refers to an investment or tax planning, such as a lender who requires you to transfer cash assets to their management as a condition of the finance, then we recommend you seek appropriate professional advice.

 

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