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A Guide to Stamp Duty Land Tax (SDLT)

Stamp duty is chargeable mainly in respect of transactions in land and leases (now known as stamp duty land tax) and other chargeable securities such as shares in companies (stamp duty reserve tax)

It is the liability of the purchaser to pay and is based on the price paid or value if not paid in cash.

Stamp Duty Land Tax
Stamp duty land tax was introduced on 1 December 2003 as a tax on transactions relating to UK land including houses, flats, other land and both grant and assignment of leases.

The purchaser is responsible for the payment of the tax and filing of the stamp duty return, although is normally done by their solicitor on their behalf. The return should be filed within 30 days of the transaction.

SDLT is payable whether or not the parties to the transaction are based in the UK and whether or not a document is used. The consideration on which SDLT is paid is money or money's worth and where consideration is contingent it is payable on the assumption that the contingent consideration will be payable.

SDLT is also charged on any VAT included in the transaction.

If you are buying land or property, the amount of SDLT payable is dependent upon the purchase value as shown in the following table with a higher starting point for land in designated disadvantaged areas...

For disadvantaged areas, sales of land and buildings up to £150,000 are exempt.

Zero Carbon Homes
From 1 October 2007 until 30th September 2012, all new zero carbon homes costing up to £500K are to be exempt from stamp duty land tax. Homes above this will have the first £500K exempt. This only applies to new homes which have SDLT on the first sale.

Grant and assignment of leases
Stamp duty land tax is applicable to both lease premiums and to the rental element of a lease.

The premium is treated for SDLT purposed the same as if was for a freehold.

The rental element of the lease is valued by calculating the net present value of the future rental payments under the lease. Grants of more than 7 years must be notified to HMRC but those of less than 7 years need only be notified if there is a charge to tax. Assignments needs to notified even if below the threshold.

Stamp duty reserve tax

Stamp duty reserve tax is mainly dealt with by Stock exchange brokers and financial intermediaries.

SDRT is charged at 0.5% on the value of the consideration for the transfer.

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