Stamp Duty Land Tax Exemptions
Stamp Duty Land Tax (SDLT) is charged on property transactions in the UK when their value is above a set threshold. Depending on the nature of these transactions, there are some cases when the buyer will qualify for SDLT relief or Stamp Duty exemptions.
The rules on SDLT are subject to annual reviews and have continued to change over the last few years. Therefore, consulting a professional for SDLT exemptions and reliefs is paramount, even for the most straightforward property purchases.
As of November 2017, first-time buyers are exempt from paying Stamp Duty Land Tax on properties up to £300,000.
There are several other cases in which you can be eligible for an SDLT exemption.
There are no money or other payment exchanges during the property transfer. In these circumstances, you also don’t need to file an SDLT return.
You are named as property owner in someone’s will. This includes properties with outstanding debts, like mortgages.
The property is transferred or split because of divorce or dissolution of a civil partnership
The transaction is for a freehold property with a purchase price less than £40,000
When you buy an assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
When you buy a new or assigned lease of fewer than 7 years, but the amount you pay is less than the residential or non residential SDLT threshold
When alternative property financial arrangements have been put in practice (e.g. to comply with Sharia law)
In light of Covid-19, the Government has introduced new temporary rules on SDLT exemptions in England and Northern Ireland. As of July 2020, you are not required to pay Stamp Duty Land Tax on residential properties of up to £500,000. These rates will remain in place until 31st of March 2021. Find out more information here.
SDLT Exemptions for Companies
Stamp Duty Land Tax (SDLT) is charged at 15% on residential properties costing more than £500,000 bought by companies and corporate organisations.
In certain cases, the 15% charge may not apply. This applies to properties bought by a company acting as a trustee of a settlement. SDLT exemptions are also valid if a company buys a property to use it for one of the following reasons:
When the property will be used for property rental business
When the property is used for developers and traders
If the property is made available to members of the public
When financial institutions are acquiring property in the course of lending
When the property is occupied by employees
Building Company Buying an Individual’s Home
When a building company buys a home from someone who, in turn, is buying a new home from them, the property bought by the company is exempt from SDLT if certain conditions are met. These include specifications around the area size of the property and the living arrangements of the individual who is selling the property.
Employer Buying an Employee’s Home
Sometimes, an employer may wish to buy an employee’s home. In this case, the employer or property trader will be eligible for a SDLT exemption under certain conditions. These will mostly depend on the employee’s living situation. The purchase will only be exempt from Stamp Duty Land Tax if the employee had to relocate for their job.
How to Claim SDLT Exemption?
Due to the various rules and changing requirements, it can be complicated to claim Stamp Duty exemptions. Consulting an experienced tax specialist will help you assess the possibilities for SDLT exemptions and relief prior to your property purchase.
If you’ve overpaid stamp duty tax for a property you already own, you could claim an SDLT refund. You may also be entitled to an SDLT return if there are outstanding stamp duty exemptions which were omitted during the purchase process.
CapEx Associates will carry out a comprehensive assessment of your purchases and provide advice via a qualified Chartered Tax Advisor. This will ensure your land and buildings transaction tax is being legitimately inspected. Contact us today to find out how our experts can help.