If you purchase a residential property between now and 31 March 2021, you only start to pay Stamp Duty Land Tax “SDLT” on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before, but it does have to be your only property at that time.

Companies and individuals can benefit from the reduction, so long as they are buying residential property. SDLT applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

New rates until 31 March 2021

Property value SDLT rate
Up to £500,000 Zero
The next £425,000 (the part from £500,001 to £925,000) 5%
The next £575,000 (the part from £925,001 to £1.5 million) 10%
The remaining amount (the part above £1.5 million) 12%

Example

If you buy a house for £575,000, the SDLT you owe is calculated as follows:

  • 0% on the first £500,000 = £0
  • 5% on the final £75,000 = £3,750

Total SDLT = £3,750

This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8 July 2020.

You can use the Government’s SDLT calculator to work out how much tax you’ll need to pay.

Higher rates for additional properties

If you’re buying a second home, you’ll still pay SDLT on any property costing more than £40,000 – paying an extra 3%.  Simply add 3% to each of the rates shown in the above chart to calculate how much you will pay.

How to pay SDLT

Usually your solicitor will deal with the SDLT return and any payment due, although you can do it yourself. As the buyer, you are ultimately responsible for making sure it’s all submitted on time.

If the price of your new home is under £500,000 you must still submit a return (unless exempt) even though you won’t need to pay any SDLT.

When else is SDLT not payable?

There are other circumstances in which SDLT is not payable:

  • Transfer of property in separation or divorce: If you’re divorcing or separating from your spouse or partner, there’s no SDLT to pay if you transfer a proportion of your home’s value to them.
  • Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your Will – they won’t have to pay SDLT on the market value of the property.

For any questions about SDLT, for a conveyancing quote or any question relating to residential property, please contact Joanne Ayrton on joanneayrton@fsmsolicitors.co.uk or 01373 485485, or visit www.fsmsolicitors.co.uk.

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