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Residential & Non Residential Stamp Duty

When it comes stamp duty there is two main types of residential stamp duty and non-residential stamp duty. Residential SDLT (or Stamp Duty Land Tax to give its fuller name) will apply if you are buying a residential property, whereas Non Residential SDLT will apply for commercial or other types of land or properties.

Stamp duty is basically a tax on property purchases (it can also be payable on other transactions and different rules apply), and currently applies to all properties over £125,000 (correct at June 2020). Stamp duty will be collected by your solicitor and is calculated as follows:

There are sometimes situations whereby First Time Buyers will pay reduced or no residential stamp duty, also some transactions e.g. Shared Ownership may fall outside the limits where it is payable (at least initially). Please contact us to discuss either further.

What is payable?

The following is based on Residential SDLT rules from 4th December 2014

Property or lease premium or transfer value SDLT rate

Band   Band SDLT rates

£0

£125,000

0%

£125,001

£250,000

2%

£250,001

£925,000

5%

£925,001

£1,500,000

10%

£1500000 +

12%

As an example, if you were buying a property at £350000 then you would pay:

0% on the first £125000, then 2% on the next £125000 and 5% on the last £100000 = £0 + £2500 + £5000 = £7500 overall

A link to the HMRC website calculator is here:

www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

www.gov.uk/stamp-duty-land-tax/residential-property-rates

3% Stamp duty land tax (sdlt) surcharge

From the 1st April 2016, an additional surcharge was brought in for second property purchases.

This applies to anyone who is buying an additional residential property for £40,000 or more. This could mean a holiday home, buy-to-let or even a main residence you plan to live in.

Even if you already own just a share in another property, it will count so long the share is worth £40,000 or more. Properties anywhere in the world are considered too. So, for instance, if you own an apartment in Spain and are buying your first home in the UK, you will be stung with the extra tax.

The higher rates of Stamp Duty applies to the purchase of property in England, Wales, Northern Ireland and – under a separate announcement in the Scottish Government’s 2015 pre-election Budget – in Scotland too.

What is payable?

In effect an extra 3% on the full purchase price (may also apply to non-purchase transactions too, for instance buying another share in a property you already own) is payable.

See below:

Property or lease premium or transfer value SDLT rate 

Band   Band Normal SDLT rates Additional Surcharge rate

£0

£125,000

0%

3%

£125,001

£250,000

2%

3%

£250,001

£925,000

5%

3%

£925,001

£1,500,000

10%

3%

£1500000 +

12%

3%

As an example, if you were buying a property (and it being a second property) at £350000 then you would pay:

0% on the first £125000, then 2% on the next £125000 and 5% on the last £100000 PLUS 3% on the full value too = £0 + £2500 + £5000 + £10500 = £18000 overall (i.e. £10500 extra!)

There are rules that apply where the surcharge rate is not payable (or is refundable), these are complex so you should take legal advice or speak to HMRC for guidance (see links above).

For instance, one situation is where you are replacing a main residence with another main residence (but also own a second property), the surcharge may not be payable.

Also, if you buy a new main residence and there is a delay before selling the existing main residence (and you own a second property as well), the surcharge may be payable but refundable by HMRC later on (once the sale of the original main residence was completed).

We would strongly recommend that you take advice from a solicitor and/or HMRC for guidance on these matters before proceeding if things are not straight forward. Contact us today if you require further information on residential stamp duty or non residential stamp duty.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.

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