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A Guide to Stamp Duty Land Tax (SDLT) UK 2021


What is Stamp Duty Land Tax (SDLT)

When you purchase a property or land in England or Northern Ireland, there is a payable tax which is called Stamp Duty Land Tax (SDLT).  In Scotland or Wales it is entirely different where it's known as Land and Buildings Transaction Tax and Land Transaction Tax respectively.

You pay the tax when you:

  • buy a freehold property
  • purchase a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferring land or property in exchange for payment, for example you take on a mortgage or buy a share in a house.

Tax Threshold

The threshold is where SDLT starts to apply. If you buy a property for less than the threshold, there’s no SDLT to pay.

The below table will explain the threshold and taxable rate for SDLT:

So if you're purchasing a main residence or planning to purchase additional property or land in England or Northern Ireland (between 30 July 2020 and 31 March 2021), these are the taxable rates applied.

Here's a few scenarios:

1. You're purchasing a main residence at the price of £200,000...

For main residences, there's no payment for stamp duty at all since it is below £500,000.

2. You're purchasing a main residence at the price of £650,000...

0% on the first £500,000 = £0

5% on the remaining £150,000 = £7,500

Therefore, you have to pay £7,500 for stamp duty.

3. You're buying another property at the price of £180,000...

Since this is an additional property, there is a taxable amount of 3% for the first £500,000.

3% of £180,000 = £5,400

Therefore, you have to pay £5,400 for stamp duty.

Meanwhile if you purchase a land or property from 1 April 2021 onwards, these are the taxable rates:

With the difference of taxable rates, the calculation of SDLT remains unchanged.

Read more: UK Property Purchase Strategies (I) Process and Precautions

Stamp Duty rates for first time buyers

For first time buyers before the commencement of the new SDLT rates, they will enjoy 0% tax rate for the first £500,000. Meanwhile, 1 April onwards, first time buyers purchasing a property up to £500,000 in value will be eligible for the discounted stamp duty rates below.

How and When to pay SDLT?

It is crucial for you to know that, you must send an SDLT return to Her Majesty's Revenue & Customs (HMRC) and pay the tax within 14 days of completion / date of entry. The longer you delay, you might be penalized.

If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees. They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.

First time buyers get 0% tax rates for a limited time! Interested in purchasing real estate in England or Northern Ireland? Our team of experts are just the people you're looking for. Drop us your contact below and we will get in touch!

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