The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. However, there are different rules for people buying their first home. A discount will be applied to the tax bill if the purchase was completed on or after 22 November 2017, the purchase price was £500,000 or less and the purchaser(s) is a first time buyer.
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The tax is paid when the property is freehold, new or existing leasehold, through a shared ownership scheme or is is transferred land or property in exchange for payment, an example being that the person takes on a mortgage or buys a specific share in a house.
The actual amount paid will depend on if the property is residential and the owner is a first time buyer, if it is non-residential or mixed-use.
HMRC provide a SDLT calculator which can help people work out how much they’ll owe.
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This calculator starts by asking if the purchase is for a freehold or leasehold property. It will then ask if it is residential purchase or not and when the transaction was completed.
The user will be asked if they are purchasing the property individually and if it will result in them owning more than one property in total.
Finally, the user will be asked for the final sale price and a total SDLT figure will be displayed.
The total value that has SDLT paid on is sometimes called the “consideration” and it can include other, more niche factors.
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Things that are sometimes taken into account include goods, works or services on the property, release from debt or a transfer of debt.
Once the completion of the purchase occurs, the buyer must complete an SDLT return to HMRC and pay the tax within 14 days.
This timing is important as there may be penalties and interest charges on any late payments.
Changes to SDLT will be a key priority for many as we approach the 2020 budget.
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No official announcements have been given for SDLT yet and that will likely remain the case until the budget is laid out.
However, rules concerning SDLT are often changed and they are a common target for budgets and government statements.
Non-resident buyers are often affected by the changes made, with the conservative government committing in 2019 to introduce a higher rate of stamp duty for non UK tax residents.
Prior to this, there has also been many changes made to SDLT in an effort to increase tax revenues.
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In the 2012 budget the SDLT rate was seven percent on residential purchases over £2million. The budget from 2014 detailed that a 15% SDLT rate would be applied to properties valued above £500,000 and in the autumn statement from the same year, George Osborne abolished the residential “slab” system.
In the 2015 Autumn statement an increased SDLT was introduced for second homes and buy-to-let properties. In 2016, the budget removed the “slab” system for commercial or mixed properties and made changes to the rates.
Currently, SDLT is levied on a tapering system, as the government detail below:
Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) Two percent
The next £675,000 (the portion from £250,001 to £925,000) Five percent
The next £575,000 (the portion from £925,001 to £1.5 million) 10 percent
The remaining amount (the portion above £1.5 million) 12 percent
As mentioned, no official announcements have been made but the government detailed previously that they hope to levy a surcharge of three percent on non residential individuals and companies. This could mean that, for some property buyers, their SDLT charge could be as high as 15 percent.