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Stamp Duty Land Tax

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Upon purchasing (or transferring) a property/plot of land within the UK, there is a tax that is payable by the purchaser. This is commonly known as Stamp Duty, but the full name is Stamp Duty Land Tax (SDLT). The Stamp Duty is only payable on purchases which exceed a certain threshold. This article aims to shed some light on Stamp Duty and the tax implications of purchasing properties. As mentioned above, the principle of stamp duty is that it is paid as a consequence of purchasing land or property. And in broad terms, the stamp duty is charged as a percentage of the total value paid for the property or land. There are however a considerable number of factors which will affect how much stamp duty is payable. This can depend on:
  • Is the property residential or non-residential
  • Freehold or leasehold
  • Whether there are multiple transactions that are linked
SDLT is charged as a percentage of the amount that was paid for the property and in general terms, the higher the value of the property/land is, the higher the percentage will be. This is the general trend, but there is more to the SDLT rates and thresholds which are detailed below. There are (just like most other taxes) some reliefs and exemptions. This article will not dwell too much on this section, but a brief list of those transactions where there is no SDLT payable is when:
  • There was no chargeable consideration in the transaction
  • Properties that are left in a will
  • Transfer of a property during a divorce or when there is dissolution of a civil partnership
When calculating the amount of SDLT payable, an individual must take into consideration the ‘chargeable consideration’. This includes the total sum of money/consideration that is exchanged for the property. You then take the total consideration for the property/land and apply the SDLT rate; these are listed below.
Value of Property SDLT Rate
<£125,000 0%
£125,000 - £250,000 1%
£251,000 - £500,000 3%
£500,001 - £1,000,000 4%
£1,000,001 - £2,000,000 5%
>£2,000,000 from 22/03/2012 7%* / 15%**
*This only applies to residential property **This applies to corporate bodies. If you are liable to paying the stamp duty land tax, this will need to be declared to HM Revenue & Customs (HMRC) within 30 days of the ‘effective date’. In order to do this, it is a requirement to submit a SDLT return to HMRC and it is the responsibility of the purchaser to do this. If submission of this return is late, then penalties will be incurred and charged by HMRC. If you would like to find out more about stamp duty or any other capital gains tax issues then please feel free to contact us on 020 8952 0140 or email us on [email protected] where one of our tax specialists will be more than happy to help you.    

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