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Stamp Duty Land Tax: Residential Property Rates

Buying a new home entails a range of financial considerations, including legal fees, agent costs and, more often than not, Stamp Duty Land Tax.


We take a look at the current Stamp Duty Land Tax rates on residential properties, as well as those taking effect in 2021.

Stamp Duty Land Tax - Residential Rates

What is Stamp Duty Land Tax?

All buyers must pay Stamp Duty Land Tax (SDLT) when purchasing a property or land exceeding a specific price threshold in England or Northern Ireland.


SDLT is applicable on freehold properties, new or existing leaseholds, purchases made through shared ownership schemes and property transfers carried out in exchange for a sum of money. The amount payable typically depends on when you bought the property and how much it cost you.


SDLT Residential Rates

As of July 8th 2020 and until March 31st 2021, the Government has implemented new rates for stamp duty on residential properties as follows:


Property/ Lease Premium/ Transfer Value - Stamp Duty Land Tax rate

  • Up to £500,0000 - 0

  • The next £425,000 (from £500,001 to £925,000) - 5%

  • The next £575,000 (from £925,001 to £1.5 million) -10%

  • The remaining amount (anything above £1.5M) -12%


Example: In September 2020, John pays £720,000 for a house. The Stamp Duty Land Tax he owes will be 0% on the first £500,000 and 5% on the remaining amount up to £720,000. This means the SDLT charge will be 5% from £220,000 which amounts to £11,000.


Residential Stamp Duty Rates for properties bought after April 1st 2021 and before July 8th 2020:


Property/ Lease Premium/ Transfer Value - Stamp Duty Land Tax rate

  • Up to £125,0000 - 0

  • The next £125,000 (from £125,001 to £250,000) - 2%

  • The next £675,000 (from £250,001 to £925,000) - 5%

  • The next £575,000 (from £925,001 to £1.5M) - 10%

  • The remaining amount (anything above £1.5M) - 12%

SDLT returns must be sent if you pay more than £40,000 for a residential property, regardless if there is a Stamp Duty Land Tax charge or not. However, there are instances when buyers may be eligible for an SDLT relief.


Stamp Duty Land Tax Relief for First Time Buyers

Buyers who purchase their first home before April 2021 or July 8th 2020 may claim a Stamp Duty Land Tax relief. This means they won’t need to pay SDLT on residential properties costing less than £300,000 and only a 5% SDLT charge on any amount ranging from £300,001 to £500,000. If the property is priced higher than £500,000, then you pay the same standard rates as those who have already bought a home before.


If you’ve bought your first residential property through a shared ownership scheme on or after November 22nd 2017, you can claim SDLT relief if you intend to occupy the property as your main residence and the market value of the property is £500,000 or less.


SDLT on New Leaseholds and Property Transfers

For those buying a new residential leasehold property before April 2021 and July 8th 2020, the Stamp Duty Tax is payable on the lease premium using the same rates above. This is not applicable to existing or assigned leases where you need to pay the same SDLT rates as for freehold properties.


Stamp Duty Land Tax on Additional Properties

There are higher rates of stamp duty land tax for those who own more than one residential property. This means you’ll have to pay an extra 3% on top of the standard SDLT rates if buying a new home indicates you’ll own more than one.


However, if you sell your previous main residence to replace it with a new residential property, then you won’t need to pay the 3% SDLT surcharge.


Sometimes, buyers will take longer to sell their previous residence in which case they still need to pay the higher rates. Nonetheless, if they sell the property within 36 months, they become eligible for an SDLT refund. In exceptional circumstances, buyers may still reclaim the Stamp Duty Land Tax surcharge even if they take longer than 36 months to sell their old property.


The latest exception that will allow you to still reclaim SDLT surcharge revolves around the impact of COVID-19 which may have prevented the sale.


Stamp Duty Exemptions

In other cases, buyers may become eligible for SDLT exemptions. This is applicable to those buying freehold properties costing less than £40,000, inherited properties, new or existing leases of less than 7 years and more.


Find out more about Stamp Duty Land Tax Exemptions here.


Need Help?

If you think you may be owed an SDLT repayment, CapEX Associates can help support your Stamp Duty Land Tax reclaim. Contact our expert tax advisors and get your refund as soon as possible!

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Cap Ex Associates Tax Ltd

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Barston

Solihull

West Mids B92 0JN

Tel:  0121 272 0801

Email:  lee.bould@capextax.com

Company number: 11166174

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