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TAX TIP TUESDAY: Stamp Duty Land Tax Update

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 


Stamp duty land tax (SDLT) is tax that is due when land and property changes owners. Generally, that means that a sale has taken place, but the exact definition only states that the property is exchanged for “consideration,” which means you could trade for goods or services instead.

How much you pay in stamp duty depends on the consideration and we always advise that you’re aware of exactly how much is due before ownership transfer is complete.


Sole residential property

SDLT is calculated based on previous property ownership. Meaning that the rate of tax you pay is based on whether or not you already own property. So a first time buyer’s stamp duty will be vastly different from someone who owns multiple properties.

The two most common scenarios are first time buyers and moving from one home to another. For moving from one residence to the next, it’s easy to calculate the SDLT owed, you simply follow the rates outlined in the table below.

For first time buyers, as of November 2017, stamp duty is only due after £300,000 if the property is £500,000 or less. However, standard rates apply if the property is over £500,000.

Consideration SDLT Rate
Up to £125,000 0%
Next £125,000 (£125,001 to £250,000) 2%
Next £675,000 (£250,001 to £925,000) 5%
Next £575,000 (£925,001 to £1.5 million) 10%
Excess over £1.5 million 12%

Multiple properties

For more than one property, each additional one over £40,000 is subject to a supplemental 3% SDLT. This affects individuals buying second or holiday homes and buy-to-let or investment properties.

It’s worth noting that if you purchase a home before you sell your old home and you are subject to the supplemental 3% tax, you can reclaim this tax if you sell the previous home within three years.


Transfers upon marriage or divorce

When a property is transferred from one owner to multiple owners, in the event of marriage, civil partnership, or co-habitation, SDLT may also be payable, but the amount will vary and does not necessarily need to be in the form of an outright payment. The thresholds in the table above apply in this situation as well.

Conversely, when ownership is transferred to a single entity as part of a legal agreement, no SDLT is due. If the property is split equally between the two parties then stamp duty isn’t triggered, but any deal that splits ownership disproportionately will incur tax.


Gifts

Because there is nothing being charged when gifting, there is no SDLT due, regardless of the portion of the property that is being gifted, including the inheritance of a property in a will.

If you still have questions about stamp duty land tax, including when it is due and how much you will owe in the event that it is payable, contact us today.


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