Stamp taxes

Stamp duty land tax

Stamp duty land tax (SDLT) on residential property is charged at different rates depending on the portion of the purchase price that falls within a certain rate band.

Rates are applied only to the portion of the property's value that exceeds the relevant band threshold. This replaces the previous 'slab rate' system under which SDLT was charged against the total property value.

Stamp duty land tax on residential properties from 4 December 2014

Cost SDLT rate
Up to £125,000 0%
£125,001 to £250,000 2%
£250,001 to £925,000 5%
£925,001 to £1,500,000 10%
Over £1,500,000 12%

If you exchanged contracts on or before 3 December 2014 but the transaction is completed on or after 4 December, you can choose whether you follow the new or the old rules.

The land and buildings transaction tax replaces stamp duty in Scotland on 1 April 2015. The new SDLT rules will also apply in Scotland until then.

Stamp duty land tax on residential properties before 4 December 2014

Transfers of property were subject to SDLT at the following rates before 4 December 2014.

Cost SDLT rate
Up to £125,000 0%
£125,001 to £250,000 1%
£250,001 to £500,000 3%
£500,001 to £1,000,000 4%
£1,000,001 to £2,000,000 5%
Over £2,000,000 7%
Over £500,000* 15%*

* The 15% rate applies to certain acquisitions of residential property by 'non-natural' persons. That is a company, a partnership including a company or a collective investment scheme.

Non residential and mixed use properties

STLT is charged on non residential and mized use properties at the following rates.

Cost SDLT rate
Up to £150,000 0%
£150,001 to £250,000 1%
£250,001 to £500,000 3%
Over £500,000 4%

Partnerships

Stamp duty applies to transfers of partnership interests, but the amount payable will not exceed the amount that would have been payable on the value of any shares or securities included in the transfer.

SDLT applies to the transfer of an interest in land into or out of a partnership or the transfer of an interest in a partnership (where the partnership property includes an interest in land). The charge is based on the reported value of the land and the proportionate interest transferred and it applies only to partnerships whose sole or main activity is investing in or dealing in land. There is no longer an SDLT charge on transfers of partnership interests in other partnerships such as professional partnerships, farming partnerships or partnerships carrying on a trade which is not land-related.

New leases

Duty is charged according to the net present value of all the rental payments over the term of the lease (NPV), with a single rate of 1% on residential NPV's over £125,000 and on non-residential NPV's over £150,000.

VAT is excluded from treatment as consideration provided the landlord has not opted to charge VAT by the time the lease is granted.

Lease premiums

Duty on premiums is the same as for transfers of land (except that the zero rate does not apply where rent of over £600 annually is also payable).

Zero carbon homes

Qualification for this relief will require zero carbon emissions from all energy use in the home over a year. To achieve this, the fabric of the home will be required to reach a very high energy efficient standard and be able to provide onsite renewable heat and power. The relief is available for the five years to 30 September 2012 and applies to new homes which are liable to SDLT on the first sale. SDLT relief will be available where the purchase price is up to £500,000. Where the price exceeds £500,000 the SDLT liability will be reduced by £15,000. In this circumstance the balance of SDLT will remain due.

Please contact us for further information relating to the qualifying criteria, the fabric of the building, heat and power generation and additional power for appliances.

Transfers that attract stamp duty not exceeding £5 (fixed or ad valorem) will be exempt and not have to be presented for stamping. The principal reason for this is to reduce administration for smaller transactions.