Stamp Duty (SDLT) Changes


From midnight on 4th December 2014, the rates of stamp duty (SDLT) payable on a property transaction were changed by the UK Government. Details on these changes can be found below.

What do these changes mean?

It is estimated that approximately 98% of homeowners will pay less under the new scheme than in the previous SDLT structure.

For example, a person buying a house for £200,000 will pay nothing on the first £125,000, and then 2% of the next £75,000, giving them a SDLT bill of £1,500. Under the previous structure they would have paid 1% on the total purchase price, giving them a bill of £2,000. Although the percentage rates appear higher in some cases, the overall charge will mostly be lower.

Someone buying an family home for an average price in England and Wales will now pay £4,500 less in stamp duty. The new system will also smooth out the steps – or sudden jumps – in existing stamp duty thresholds.

What are the rates?

SDLT is charged at different rates depending on the portion of the purchase price that falls into each rate band.

Before 4 December 2014, SDLT was charged as a single percentage of the property price.

Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on 4 December or later, you can choose whether you follow the new or the old rules.

Residential properties

Purchase price of property Rate of SDLT (percentage of portion of purchase price)
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12%

Corporate bodies

SDLT is charged at 15% on residential dwellings costing more than £500,000 bought by bodies like:

  • companies
  • collective investment schemes

There are some exceptions. For example, you pay SDLT based on the new rates and bands where the property is used for:

  • a property rental business
  • a property development or resale trade
  • providing admission to visitors on a commercial basis

Residential leases

If your residential lease is for more than £125,000, you’ll pay 1% SDLTon the amount above the £125,000 threshold.

Non-residential and mixed-use properties

Purchase price/lease premium or transfer value Rate of SDLT (percentage of portion of purchase price)
Up to £150,000 – annual rent is less than £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%

 

Source: gov.uk

For further information on the Stamp Duty payable on your property purchase please contact one of our team of professionals in your local office, who will be more than happy to assist.