Category: Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is a tax that may apply when you buy land or property in England or Northern Ireland. It is important to check whether SDLT applies before completing a purchase, as the tax can represent a significant additional cost.

SDLT can apply when you buy a freehold property, a new or existing leasehold property, a property through a shared ownership scheme, or when land or property is transferred in exchange for payment. The amount of SDLT due depends on factors including the type of property, the purchase price and whether any reliefs or exemptions apply.

For residential property purchases in England and Northern Ireland, SDLT is charged on a banded basis, meaning different portions of the purchase price are taxed at different rates. The current rates for a standard residential property purchase are:

• 0% on the first £125,000
• 2% on the portion from £125,001 to £250,000
• 5% on the portion from £250,001 to £925,000
• 10% on the portion from £925,001 to £1.5 million
• 12% on the portion above £1.5 million

Different rules apply for certain buyers. First-time buyers may qualify for relief, while those purchasing an additional residential property will usually pay an additional 5% on top of the standard rates. Non-UK residents may also be subject to different rates.

SDLT only applies to property and land transactions in England and Northern Ireland. Scotland has a separate tax called Land and Buildings Transaction Tax (LBTT), while Wales has Land Transaction Tax (LTT). 

An SDLT return normally needs to be submitted to HMRC and any tax due paid within 14 days of a property purchase completion. Your solicitor or conveyancer will usually deal with this as part of the purchase process.

The Annual Tax on Enveloped Dwellings (ATED) is a charge that applies to certain high-value residential properties held by non-natural persons (NNPs). It is designed to ensure that residential properties held through corporate or similar structures are subject to an annual tax charge where their value exceeds a set threshold.

ATED is payable mainly by companies that own UK residential property valued at more than £500,000. However, this liability can also extend to other NNPs that own interests in UK dwellings including certain partnerships where companies are members, and managers of collective investment schemes, all of which are treated as NNPs under the legislation.

A property is treated as a dwelling for ATED purposes if it is used, or could be used, as a residence, such as a house or flat, and includes any associated gardens, grounds and buildings within them. 

For the current charging structure from 1 April 2026, ATED is calculated based on the value band of the property as follows:

• Properties worth over £500,000 but not exceeding £1 million: £4,600 
• Properties worth over £1 million but not exceeding £2 million: £9,450 
• Properties worth over £2 million but not exceeding £5 million: £32,200 
• Properties worth over £5 million but not exceeding £10 million: £75,450 
• Properties worth over £10 million but not exceeding £20 million: £151,450 
• Properties worth over £20 million: £303,450 

Properties needing repairs still count as homes and false claims to recover Stamp Duty Land Tax could mean big tax bills and penalties.

HMRC has issued a warning to homebuyers about rogue tax agents promoting false Stamp Duty Land Tax (SDLT) repayment claims, especially those based on the condition of properties. Following a recent Court of Appeal decision, it has been confirmed that properties requiring repairs remain liable for residential rates of SDLT if they retain the fundamental characteristics of a dwelling. This applies even if the properties are temporarily uninhabitable.

Some agents exploit this by misleading buyers into believing they can reclaim SDLT by arguing the property is “non-residential.” These agents often charge hefty fees and leave homeowners liable for repayment of the tax, penalties, and interest.

HMRC’s press release on the matter provides an illustrative example of a person who bought a house in London for £1,100,000 with his solicitor filing the SDLT return and SDLT being calculated at the residential rates (£53,750). The home required some modernisation and repair.

The homebuyer was then targeted by a repayment agent who claimed he could recover £9,250 in SDLT due to property repairs. The agent took a 30% fee, and the homebuyer received £6,475. Later, HMRC carried out a compliance check and found the property was residential all along. This meant that the homebuyer was left owing the full £9,250, plus interest and penalties, with the agent refusing to assist.

The case reinforces that a property’s poor condition does not alter its classification as a dwelling if it is structurally sound and previously used as a home. SDLT claims that are invalid can result in serious financial consequences for the buyer, who is ultimately responsible for the accuracy of any SDLT repayment submission.

We would be happy to help you consider where you are eligible to make a claim without incurring unnecessary fees or risks.

From April 2025, updated ATED rates apply to residential properties held by companies and other Non-Natural Persons (NNPs). Make sure returns and payments are submitted by 30 April to avoid penalties. Reliefs may apply for commercial use.

The Annual Tax on Enveloped Dwellings (ATED) applies to NNPs who own interests in residential properties valued over £500,000. These provisions specifically affect entities such as companies, partnerships with company members, and managers of collective investment schemes, which are all classified as NNPs under the legislation.

Individuals who own property directly (rather than through a company) are not subject to ATED or ATED-related Capital Gains Tax (CGT). Furthermore, certain reliefs may be available if the property is used for commercial purposes.

Since 1 April 2025, ATED is charged based on the following property value bands:

For properties that were subject to ATED on 1 April 2025, both the return and payment must be submitted by 30 April 2025, covering the ATED period from 1 April 2025 to 31 March 2026. If a property is acquired after 1 April and falls within the scope of ATED, payment is due within 30 days of acquisition.

Penalties may be imposed for late filing, late payments, or inaccurate returns. Taxpayers have 30 days to appeal HMRC decisions, including penalties or determinations, by providing the grounds for the appeal.

It was announced as part of the Budget measures that the higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties will increase to 5% (from 3%) for transactions with an effective date on or after 31 October 2024.

This applies to individual purchases of additional residential property such as buy to let properties and second homes in England and Northern Ireland. The higher rate does not usually apply to individuals who own one residential property irrespective of the intended use of the property. However, individuals might be required to pay the higher rates even if they plan to live in the property they are purchasing and do not own another residential property. This is because the rules apply not just to the buyer, but also to anyone they are married to or purchasing the property jointly with. The measure also increases the single rate of SDLT payable by companies and other non-natural persons when purchasing residential properties worth more than £500,000, from 15% to 17%.

Temporary changes were made by the previous government in September 2022 to various SDLT bands reducing the amount of SDLT payable for many buyers. No SDLT is currently payable for first-time buyers making a purchase of up to £425,000 (£300,000 prior to 23 September 2022). The relief also applies to the first £425,000 (£300,000 prior to 23 September 2022) for purchases up to £625,000 (£500,000 prior to 23 September 2022). There is no SDLT relief available for first-time buyers spending more than £625,000 (£500,000 prior to 23 September 2022) on a property. No extension to these temporary changes was announced as part of the Budget measures so these figures are now expected to revert back to the old limits on 31 March 2025 as planned.

In addition, the SDLT zero rate band was increased from £125,000 to £250,000 from 23 September 2022. This resulted in the removal of the 2% band for properties ranging from £125,000 to £250,000. These changes are also temporary and set to revert back to the old limits on 31 March 2025.

The higher rates of Stamp Duty Land Tax (SDLT) were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let properties and second homes. The higher rate is 3% higher than the regular SDLT rates and applies to the purchase of additional residential properties valued at over £40,000.

The higher rates of SDLT apply to purchases of additional residential properties in England and Northern Ireland. The higher rate does not apply to individuals who own only one residential property, irrespective of the intended use of the property.

You might be required to pay the higher rates even if you plan to live in the property you are purchasing even if you do not own another residential property. This is because the rules apply not just to you (the buyer), but also to anyone you are married to or purchasing the property jointly with.

Multiple Dwellings Relief (MDR) was an SDLT relief which had benefitted purchasers of multiple residential properties. However, MDR was abolished for transactions which complete, or substantially perform on or after 1 June 2024.

The Scottish Land and Buildings Transaction Tax (SLBTT) applies to transactions where the land is situated in Scotland. There is a 6% SLBTT supplement for purchases of additional residential properties.

Similarly, the Welsh Land Transaction Tax (WLTT) applies to transactions where the land is situated in Wales. There is a WLTT higher rate supplement of 4% on purchases of additional residential properties.

It was announced as part of the Spring Budget 2023 that Multiple Dwellings Relief (MDR) was being abolished. This change has now come into effect for transactions which complete, or substantially perform on or after 1 June 2024.

The MDR relief applied to property purchasers who bought more than one dwelling where a transaction or a number of linked transactions included freehold or leasehold interests in more than one dwelling. This was a valuable tax relief that could substantially reduce the amount of SDLT due. The government’s view was that the MDR no longer achieved its original aims in a cost-effective way and consequently the relief has been abolished.

MDR for transactions before 1 June 2024

You can claim MDR when you buy more than one dwelling if a transaction (or a number of linked transactions) includes freehold or leasehold interests in more than one dwelling. This applies to transactions where:

• contracts were exchanged on or before 6 March 2024;
• contracts were substantially performed before 1 June 2024; and
• contracts complete before 1 June 2024.

These transactions are subject to various exclusions.

Stamp Duty Land Tax (SDLT) is payable whether you buy a freehold property, a new or existing leasehold property or a shared ownership property. SDLT has been replaced in Scotland by the Land and Buildings Transaction Tax and in Wales by the Land Transaction Tax.

The amount of SDLT you pay when you buy a leasehold property, depends on whether it’s an existing lease (an assigned lease) or a new one. There are also different amounts of SDLT payable depending on whether you are buying residential or non-residential property.

SDLT is usually payable when you buy a property through a shared ownership scheme run by an approved public body.

This includes:

• local housing authorities
• housing associations
• housing action trusts
• the Northern Ireland Housing Executive
• the Commission for the New Towns
• development corporations

Buyers of these properties can choose to make a one-off payment based on the market value of the property (‘market value election’) or pay the SDLT due in stages.

The rules are complex and the amount of SDLT depends on many different factors. If you require any further assistance, we can help.

The Annual Tax on Enveloped Dwellings (ATED) came into effect from 1 April 2013. The tax applies to certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect most companies, partnerships with company members and collective investment schemes.

For the purposes of the ATED, it is immaterial whether the company, partnership or collective investment scheme is incorporated or resident in the United Kingdom. HMRC’s technical guidance on the subject states that, a company that is not incorporated or resident in the UK, but which owns land in the UK that constitutes a ‘single-dwelling interest’ is subject to ATED provisions and is required to make returns.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs available, for example, if a property is in use for the purposes of a property rental business, run commercially, and with a view to profit (subject to certain exceptions) or held by a charity for its charitable purposes, subject to meeting various conditions.

From 1 April 2023, ATED is chargeable on property valued at:

• More than £500,000 but not more than £1 million – £4,150
• More than £1 million but not more than £2 million – £8,450
• More than £2 million but not more than £5 million – £28,650
• More than £5 million but not more than £10 million – £67,050
• More than £10 million but not more than £20 million – £134,550
• More than £20 million – £269,450

If the relevant property was within the scope of ATED on 1 April 2023, both the return and payment are due by 30 April 2023 for the ATED period 1 April 2023 to 31 March 2024.

There can be penalties for late filings, late payment or for an inaccurate return. Taxpayers can appeal a decision of HMRC, for example against a penalty or determination. Appellants have 30-days from the date of the decision to write and tell HMRC the grounds on which they are appealing.

The Welsh government has announced that it is increasing the maximum amount that local authorities can charge as a council tax premium on second homes and long-term empty properties from 100% to 300%. The new policy is set to come into effect from April 2023 and will enable councils to decide the level which is appropriate for their individual local circumstances. The government has also said that councils will be able to apply different premiums to second homes and long-term empty dwellings.

The government said that it is introducing this change to help councils raise additional funding which will ideally be used to improve the supply of affordable housing.

The Welsh government will also change the criteria for self-catering accommodation being liable for business rates, instead of council tax, from April 2023. Currently, properties that are available to let for at least 140 days, and that are actually let for at least 70 days, will pay rates rather than council tax. The change will increase these thresholds to being available to let for at least 252 days and actually let for at least 182 days in any 12-month period.

Government figures show there were almost 24,000 chargeable second homes in Wales registered for council tax purposes in January 2022. Most local authorities no longer give any discounts to long-term empty or second homes.

Stamp Duty Land Tax (SDLT) is a tax that is generally payable on the purchase or transfer of land and property in England and Northern Ireland. It is also payable in respect of certain lease premiums. You may also need to pay SDLT when all or part of an interest in land or property is transferred to you and you give anything of monetary value in exchange.

There are important issues to consider if you transfer land or property between unmarried couples and other joint owners. HMRC’s guidance on the subject states as follows:

You do not pay SDLT if 2 or more people jointly own property (as joint tenants or tenants in common) and you divide it physically and equally and own each part separately. But, if one person takes a bigger share, or all of the other’s share, and pays cash or some other consideration in exchange, you must tell HMRC. If the amount you pay is more than the current threshold, you will pay SDLT.

Joint owners (this may include unmarried couples who are splitting up) may agree that one of them will take over ownership of a property they bought together, including any outstanding mortgage.

In this case the person taking ownership will pay SDLT on the total chargeable consideration of the following (either or both), if it exceeds the SDLT threshold:

• any cash payment that one of the couple makes to the other for their share
• the proportion of the outstanding mortgage that belongs to the share of the property being transferred

Stamp Duty Land Tax (SDLT) is a tax that is generally payable on the purchase or transfer of land and property in England and Northern Ireland. Wales and Scotland set their own Stamp Duty taxes. It is also payable in respect of certain lease premiums. You may also need to pay SDLT when all or part of an interest in land or property is transferred to you and you give anything of monetary value in exchange.

There are important issues to be aware of if you transfer land or property to a company. HMRC’s guidance on the subject states as follows:

When property is transferred to a company, SDLT may be payable on its market value, not the consideration given. For example, if a property has a market value of £200,000 but the company only pays a consideration of £100,000, SDLT will still be payable on £200,000.

This applies in either of the following situations, the:

• person who transfers the property is ‘connected’ with the company – the definition of a connected person covers relatives and people who have some involvement with the company,
• company pays for the property with shares in the company (partly or wholly) to the person making the transfer, where that person is connected to the company (but not necessarily the acquiring company).

Holding properties within a limited company can have many advantages such as lower Corporation Tax rates and tax relief on interest payments. However, it is important to be aware of issues that can arise including the payment of SDLT or regional equivalents.

If you are considering transferring property to a company, please take professional advice before completing the transaction.

The Annual Tax on Enveloped Dwellings (ATED) is a tax payable by certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect certain companies, partnerships with company members and managers of collective investment schemes described in the legislation as NNPs.

To value a property, you can use a professional valuer or determine your own valuation. The valuation of the property must be in pounds sterling. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount.

The valuation date depends on when you owned the property.

The valuation dates are:

• an initial valuation date,
• a revaluation date.

There are fixed revaluation dates for all properties, every 5 years after 1 April 2012, for example on 1 April 2017, 1 April 2022 and so on, regardless of when the property was acquired.

The value of the property for any chargeable period is therefore the later of:

• its initial valuation date,
• the revaluation date.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs if a property is used for commercial purposes.

HMRC’s published guidance on the application of the 3% higher rate of Stamp Duty Land Tax (SDLT) has been updated. The higher rates of SDLT were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let and second homes.

At the time the new higher rates were introduced, HMRC confirmed that where there was a purchase of mixed use buildings consisting of residential and non-residential properties that the 3% higher rate of SDLT applied to the dwelling element.

HMRC’s guidance on this issue was updated on 13 November 2020. The new guidance makes it clear that HMRC’s view has changed and that the 3% surcharge will not apply to the dwelling element. The guidance adds the caveat that the non-residential element of the transaction is neither negligible nor artificially contrived.

This change could allow affected purchasers to claim back any overpaid SDLT on mixed use, multiple dwelling transactions from HMRC within the legal time limits. HMRC’s guidance also suggests that purchasers can now make a non-statutory clearance application in the event of uncertainty over a transaction. 

The Scottish and Welsh governments have both confirmed increases in their respective nil-rate thresholds for stamp duty purposes. This follows the announcement of an increase in the Stamp Duty Land Tax (SDLT) nil-rate band in England and Northern Ireland as part of the Chancellor’s Summer Economic update.

The Scottish government has confirmed that there will be an increase in its Land and Buildings Transaction Tax (LBTT) nil-rate band for residential property valued up to £250,000 effective from 15 July 2020, to 31 March 2021.This means that the nil-rate band is temporarily extended from £145,000 to £250,000. The additional dwelling supplement of 4% will continue to apply. LBTT replaced SDLT in Scotland from 1 April 2015.

In Wales, the Land Transaction Tax (LTT) nil-rate will be increased to £250,000 from 27 July 2020, to 31 March 2021. This means that the nil-rate band will be temporarily extended from the current nil-rate band of £180,000. The higher residential tax rate of 3% will continue to apply. LTT replaced SDLT in Wales from 1 April 2018.

As a reminder, in England and Northern Ireland the amount on which no SDLT is payable on residential property purchases has been increased to £500,000 from 8 July 2020 until 31 March 2021. The change sees a substantial increase from the previous nil-rate band of £125,000. Purchasers buying a second residential property will still have to pay the 3% higher rate of SDLT.