Stamp Duty Land Tax rates and thresholds
Stamp Duty Land Tax (SDLT) is charged on land and property transactions in the UK. The tax is charged at different rates and has different thresholds for different types of property and different values of transactions. The tax rate and payment threshold can vary according to whether the property is in residential or non-residential use, and whether it is freehold or leashold. SDLT relief is available for certain kinds of property transaction.SDLT rates for residential property
The table below applies for all freehold residential purchases and transfers and the premium paid for new lease or the assignment of an existing lease. (If the property will be used for both residential and non-residential purposes the rates differ - please see the section 'SDLT for non-residential or mixed use property').
New leases
If the tansaction involves the purchase of a new lease with a substantial rent there may be an additional SDLT charge to that shown below, based on the rent. See the next section and further table 'SDLT on rent for new leasehold properties (residential)' for more details.
Residential land or property SDLT rates and thresholds
| Purchase price / lease premium or transfer value | SDLT rate | SDLT rate for first-time buyers |
|---|---|---|
| Up to £125,000 | Zero | Zero |
| Over £125,000 | 1% | Zero |
| Over £250,000 to £500,000 | 3% | 3% |
| Over £500,000 to £1 million | 4% | 4% |
| Over £1 million | 5% | 5% |
If the value is above the payment threshold, SDLT is charged at the appropriate rate on the whole of the amount paid. For example, a house bough for £130,000 (by someone who is not a first-time buyer) is charged at 1 per cent, so £1,300 must be paid in SDLT. A house bought for £350,000 is charged at 3 per cent, so SDLT of £10,500 is payable.
First time buyers
The first time buyer's £250,000 threshold applies from 25 March 2010 up to 24 March 2012 inclusive.
£1 million threshold for wholly residential property
From 6 April 2011 SDLT on residential properties over £1 million is charged at 5%. It does not apply to non-residential or mixed-use properties.
There are some transactional arrangements for contracts which were entered into before 25 March 2010 but not completed by 6 April 2011 in most of these cases the new rate will apply.
Property bought in a disadvantaged area
If the property is in an area designated by the goverment as 'disadvantaged' a higher threshold of £150,000 applies for residential properties.
Disadvantaged areas - residential land or property SDLT rates and threshold
| Purchase price/lease premium or transfer value | SDLT rate | SDLT rate for first-time buyers |
|---|---|---|
| Up to £150,000 | Zero | Zero |
| Over £150,000 to £250,000 | 1% | Zero |
| Over £250,000 to £500,000 | 3% | 3% |
| Over £500,000 to £1 million | 4% | 4% |
| Over £1 million | 5% | 5 |
From 25 March 2010 up to 24 March 2012, first-time buyers can claim relief from SDLT if the amount paid for the property is under £250,000. This relief applies whether or not the property is in an area designated as disadvantaged.
SDLT on rent - new residential leasehold purchase
When a new residential lease has a substantial annual rent, SDLT is payable on both of the following which are calculated separately and then added together:
- the lease premium (purchase price) - see table above
- the 'net present value' (NPV) of the rent payable
In practice SDLT only becomes payable on a fairly high rent - starting at around £4,500 a year for a 99-year lease, for example, however the exact amount depends on the length of the lease.
SDLT on rent for new leashold properties (residential)
| Net present value of rent - residential | SDLT rate (includes first-time buyers) |
|---|---|
| £0 - £125,000 | Zero |
| Over £125,000 | 1% of the value that exceeds £125,000 |
Note that a higher threshold of £175,000 applied for rents on residential only leases taken from 3 September 2008 to 31 December 2009.
If six or more residential properties form part of a single transaction
If six or more properties form part of a single transaction the rules, rates and thresholds for non-residential properties apply. The amount paid for all the properties in the transaction must be added together in order to establish the rate of tax payable.
SDLT rates for non-residential or mixed use properties
Non-residential properties includes:
- commercial property such as shops or offices
- agricultural land
- forests
- any other land or property which is not used as a dwelling
- six or more residential properties bought in a single transaction
The table below applies for freehold and leasehold non-residential and mixed use purchases and transfers.
If the transaction involves the purchase of a new lease with a substantial annual rent, there may be additional SDLT charges to that shown below, based on the rent. See the later section and table for more detail.
Non-residential land or property rates and threshold
| Purchase price/lease premium or transfer value (non-residential or mixed use) | SDLT rates (includes first time buyers) |
|---|---|
| Up to £150,000 - annual rent is under £1,000 | Zero |
| Up to £150,000 - annual rent is £1,000 or more | 1% |
| Over £150,000 to £250,000 | 1% |
| Over £250,000 to £500,000 | 3% |
| Over £500,000 | 4% |
Note that for the above purpose the annual rent is the highest annual rent known to be payable in any year of the lease, not the net present value used to determine any tax payable on the rent as described below.
SDLT on rent - new non-residential or mixed use leasehold purchase
When a new non-residential or mixed use lease has a substantial annual rent, SDLT is payable on both of the following which are calculated seperately and then added together:
- the lease premium or purchase price - see the table above
- the net present value of the rent payable (this is based on the value of the total rent over the life of the lease and can be worked out using HMRC's online calculators)
| Net present value of rent - non-residential | SDLT rate (includes first time buyers) |
|---|---|
| £0 - £150,000 | Zero |
| Over £150,00 | 1% of the value that exceeds £150,000 |