SDLT: Stamp Duty Land Tax Overview

It’s important to understand your tax obligations when purchasing property in the UK, particularly Stamp Duty Land Tax, or SDLT. In this blog, we will detail exactly what SDLT is, the current SDLT rates, how it gets paid, what allowances and reliefs are available, and more.

Table of Contents

What is Stamp Duty Land Tax?
What are the Current Stamp Duty Land Tax Rates?
How to pay Stamp Duty Land Tax
SDLT Reliefs and Exemptions

What is Stamp Duty Land Tax?

Stamp Duty Land Tax is a tax that is payable when you buy a property or land in the UK. SDLT is calculated based on the amount you pay for that property or land, based on a tiered system, and whether you already own a property. SDLT is paid on commercial property as well as residential property. SDLT only applies to properties that cost over £250,000, or £150,000 for non-residential land and properties. Non-UK residents pay 2% more SDLT than UK residents.

If you are buying property in Scotland or Wales, then the Land and Buildings Transaction Tax and Land Transaction Tax respectively apply instead.

What are the Current Stamp Duty Land Tax Rates?

Stamp Duty Land Tax varies depending on the amount of properties you already have, and whether you are a first-time buyer or not. SDLT rates apply to the excess amount, so for example, if you buy a property for £300,000, you only pay SDLT on the amount over the threshold, so in this instance you would pay 5% on £50,000 rather than the full sale amount.

Note: Since the 2024 Autumn Budget, the SDLT rates have risen – this change is applicable from April 2025.

At the time of writing (November 2024), the current Stamp Duty Land Tax rates are:

For Single Residential Properties

Up to £250,000 – 0%

From £250,001 to £925,000 – 5%

From £925,001 to £1.5 million – 10%

£1.5 million or above – 12%

These thresholds apply until March 2025. From April 2025, the rates with be:

Up to £125,000 – 0%

From £125,001 to £250,000 – 2%

From £250,001 to £925,000 – 5%

From £925,001 to £1.5 million – 10%

£1.5 million or above – 12%

For first-time buyers, the SDLT threshold is £425,000, so those who buy a property for below this amount will not be eligible to pay SDLT. They will also only pay 5% on properties that cost between £425,001 – £625,000. Above £625,000, the first-time buyer relief does not apply.

For Multiple Residential Properties

SDLT is applied as follows for people buying properties when they already own at least one property. This applies even if someone has inherited a property, even if they sold it straight away and never lived in it.

Up to £250,000 – 5%

From £250,001 to £925,000 – 10%

From £925,001 to £1.5 million – 15%

£1.5 million or above – 17%

For Non-Residential Properties

Freehold:

Up to £150,000 – 0%

From £150,001 to £250,000 – 2%

£250,000 and above – 5%

Leasehold:

Up to £150,000 – 0%

From £150,001 to £5,000,000 – 1%

£5,000,000 and above – 2%

The Government website has an SDLT calculator that you can use to work out the amount of SDLT you would pay when buying a particular property.

How to pay Stamp Duty Land Tax

If you are buying a property and are eligible for SDLT, you must complete a return and pay any duty owed within 14 days of the transaction date. You need to complete an SDLT return on the Government website here. Solicitors or conveyancers can complete the return and make the payment for you. If you fail to pay the owed SDLT by the deadline, you could be fined.

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SDLT Reliefs and Exemptions

There are some reliefs and exemptions that apply to SDLT that could offer a discount to property investors, as long as certain criteria are fulfilled. Here are some reliefs and exemptions to SDLT:

Building Companies Buying Someone’s Home

If a building company or property trader buys a house from someone who is buying a house from them, then the house builder could be exempt from paying SDLT as long as no more than 0.5 hectares is included with that property, the seller has lived in the property as their sole home in the last 2 years, and they are buying a new home from the building company that they intend to live in as their sole home.

An Employer buys an Employee’s Home

If an employer buys an employee’s home because they are moving for their job, they could be exempt from paying SDLT if the employee lived in the property as their main home during the last two years, the employer is buying the house because their employee has to move due to their job relocating, the employer doesn’t pay more than market value, and there is no more than 0.5 hectares of land included with the property.

Planning Obligations

If a developer has been asked by a local authority to create amenities for the local community, e.g. a school, the developer could claim relief on SDLT.

You Buy a Second Property Before Selling Your Current Property

In this case, for example, if a married couple divorces and one or both parties buy a new home to live in before the property they owned together has been sold, they can claim back the SDLT they paid when buying a ‘second’ home once the original property is sold.

Buyers are also exempt from paying SDLT if they are registered providers of social housing, they are a charity buying property for charitable purposes and more – see more details here on the Government website.

Note: it used to be the case that buying two or more properties from the same seller meant the buyer was eligible for Multiple Dwellings Relief – since June 2024 when this relief was abolished, this is no longer the case.

By keeping up to date with the latest legislation and trends around property investment and housing, you can make the best decisions with your property portfolio that help you achieve your investment goals.

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