What is Stamp Duty?
Stamp duty land tax (SDLT) is a tax on the purchase price of land and buildings. It no longer applies in Scotland, instead buyers now pay Land and Buildings Transaction Tax.
Stamp duty operates on a sliding scale: the greater the purchase price of the property or land, the greater the rate of stamp duty that must be paid. The buyer of the property or land is responsible for completing documentation and paying the stamp duty. In practice this is usually handled by a solicitor working on your behalf to complete the sale.
This table shows the scale upon which stamp duty is applied to property in the United Kingdom:
Up to £125,000
£1,500,001 or above
There are different SDLT rules and rate calculations for:
- Corporate bodies – Stamp duty is charged at 15%, unless the property is being bought by a company that is acting as a trustee of a settlement.
- Shared ownership properties - The amount you would pay is dependent on the share of the property you own.
- Purchases that mean you own more than one property – An additional 3% is added onto the stamp duty rate for every additional property purchase.
- Multiple purchases or transfers between the same buyer and seller (‘linked purchases’) – If these purchases are residential, the residential rates would apply however if it means there is more than one property purchase, the additional 3% charge would need to be added.
There are a few instances when you may be exempt from paying stamp duty. You may not have to pay if the property transaction falls under the following parameters:
- No money or other payment changes hands for a land or property transfer.
- Property is left to you in a will.
- Property is transferred because of divorce or dissolution of a civil partnership.
- You buy a freehold property for less than £40,000.
- You buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000.
- You buy a new or assigned lease of less than 7 years, as long as the amount you pay is less than the residential or non-residential SDLT threshold.
- You use alternative property financial arrangements, eg to comply with Sharia law.
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