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Stamp Duty Land Tax, LBTT and LTT

Stamp Duty Land Tax in England and Northern Ireland

Stamp Duty Land Tax (SDLT) is a high profile tax in the property world, both from the perspective of failing tax avoidance schemes, and also because of the introduction of complex legislation applying penal rates of SDLT along with an annual tax charge on “Enveloped Dwellings” (ATED).

Our specialist real estate tax team is always at the forefront of any tax legislation changes. We digest, interpret and apply the regulations to give clear, commercial and expert advice.

Stamp Duty Land Tax is payable by the purchaser on the price paid for the property.  The rates of SDLT differ for residential and non-residential property and are shown in the table below – it can be seen that the rates for residential property are generally much higher.  There are also 2 sets of residential rates, which might be referred to as the lower rates and the normal rates.

The normal (higher) rates always apply except where the purchaser is an in individual and either:

  • After the acquisition owns only one residential property anywhere within the world; or
  • He or she is replacing his or her main home – special rules define what it’s the replacement of a main home.
  • And certain other situations involving partnerships and trusts where the above is deemed to apply.

A special penal SDLT rate of 15% applies where a property is acquired by a company for use by the company owners.

There are reliefs and exemptions where a person:

  • acquires more than one property in a single transaction;
  • for acquisitions of residential property by housebuilders and other property traders in defined situations; or
  • where a mix of residential and non-residential property is acquired.

At present SDLT applies in the same way to UK and non-UK residents.  The Government is consulting on proposals whereby non-UK residents will be subject to an additional 1% SDLT on the acquisition of residential property.

SDLT Rates:

Residential property

Transfer value Normal       

SDLT rate  

Additional

SDLT rate

Up to £125,000 Zero 3%
The next £125,000 (the portion from £125,001 to £250,000) 2% 5%
The next £675,000 (the portion from £250,001 to £925,000) 5% 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 10% 13%
The remaining amount (the portion above £1.5 million) 12% 15%

Non-residential property

Transfer value SDLT rate
Up to £150,000 Zero
The next £100,000 (the portion from £150,001 to £250,000) 2%
The remaining amount (the portion above £250,000) 5%

Scotland and Wales 

SDLT no longer applies in Scotland and Wales which have their own transfer taxes known as Land and Buildings Transaction tax (LBTT) and Land Transaction Tax (LTT) respectively.

The detailed rules for LBTT and LTT are very similar to those for SDLT although there are some important differences.  The rates are also different.  These taxes are collected and administered by Revenue Scotland and the Welsh Revenue Authority rather than by HMRC.

How BKL can help

We can assist you in minimising transfer taxes on acquisition of your property ensuring that reliefs are claimed wherever possible.

 

For more information or help from one of our property and real estate specialists, please contact us using our enquiry form.