Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is a tax that may apply when you buy land or property in England or Northern Ireland. It is important to check whether SDLT applies before completing a purchase, as the tax can represent a significant additional cost.

SDLT can apply when you buy a freehold property, a new or existing leasehold property, a property through a shared ownership scheme, or when land or property is transferred in exchange for payment. The amount of SDLT due depends on factors including the type of property, the purchase price and whether any reliefs or exemptions apply.

For residential property purchases in England and Northern Ireland, SDLT is charged on a banded basis, meaning different portions of the purchase price are taxed at different rates. The current rates for a standard residential property purchase are:

• 0% on the first £125,000
• 2% on the portion from £125,001 to £250,000
• 5% on the portion from £250,001 to £925,000
• 10% on the portion from £925,001 to £1.5 million
• 12% on the portion above £1.5 million

Different rules apply for certain buyers. First-time buyers may qualify for relief, while those purchasing an additional residential property will usually pay an additional 5% on top of the standard rates. Non-UK residents may also be subject to different rates.

SDLT only applies to property and land transactions in England and Northern Ireland. Scotland has a separate tax called Land and Buildings Transaction Tax (LBTT), while Wales has Land Transaction Tax (LTT). 

An SDLT return normally needs to be submitted to HMRC and any tax due paid within 14 days of a property purchase completion. Your solicitor or conveyancer will usually deal with this as part of the purchase process.

The Annual Tax on Enveloped Dwellings (ATED) is a charge that applies to certain high-value residential properties held by non-natural persons (NNPs). It is designed to ensure that residential properties held through corporate or similar structures are subject to an annual tax charge where their value exceeds a set threshold.

ATED is payable mainly by companies that own UK residential property valued at more than £500,000. However, this liability can also extend to other NNPs that own interests in UK dwellings including certain partnerships where companies are members, and managers of collective investment schemes, all of which are treated as NNPs under the legislation.

A property is treated as a dwelling for ATED purposes if it is used, or could be used, as a residence, such as a house or flat, and includes any associated gardens, grounds and buildings within them. 

For the current charging structure from 1 April 2026, ATED is calculated based on the value band of the property as follows:

• Properties worth over £500,000 but not exceeding £1 million: £4,600 
• Properties worth over £1 million but not exceeding £2 million: £9,450 
• Properties worth over £2 million but not exceeding £5 million: £32,200 
• Properties worth over £5 million but not exceeding £10 million: £75,450 
• Properties worth over £10 million but not exceeding £20 million: £151,450 
• Properties worth over £20 million: £303,450 

A new consultation has been launched by HM Treasury together with HMRC seeking views on the design of a new 1% Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland. This move was first mooted in the Budget 2018. The consultation closes for comments on 6 May 2019.

The consultation document makes it clear that the new SDLT surcharge would apply to freehold and leasehold purchases of residential property and will be at a rate of 1% on top of existing SDLT rates, including the rates applicable to the rental element of leasehold property. The government has said that there is evidence that purchases of property by non-UK residents is pushing up house prices for UK residents. The measure is intended to help control house price inflation. It is hoped that this move will assist more UK residents with an opportunity to buy their first home.

Mel Stride, Financial Secretary to the Treasury and Paymaster General said:

‘The UK is and will remain an open and dynamic economy, but some evidence shows that non-UK resident buyers of UK property could be inflating house prices.A 1% surcharge could help more people own their own homes in the future, and its proceeds will go towards tackling rough sleeping, boosting our plan to halve the numbers of rough sleepers by 2022.’

The government will also introduce reliefs from the new charge for crown employees working abroad and there will be a mechanism for non-residents who have paid the surcharge and move to the UK to claim a refund of the extra SDLT.

Stamp Duty Land Tax (SDLT) is a tax that is generally payable on the purchase or transfer of land and property in England and Northern Ireland. It is also payable in respect of certain lease premiums. Higher rates of SDLT were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let and second homes.

The filing and payment deadline for SDLT is currently 30 days after the ‘effective date’ of the transaction. HMRC’s guidance explains who must send a SDLT return, the penalties for late filing and how to amend a return. 

For some time, HMRC has been championing a reduction in the time limit that purchasers have to file a SDLT return and pay the tax due from 30 days to 14 days. The draft legislation to put this change in place has recently been published and barring any unforeseen circumstances, the new time limit will apply to transactions with an effective date on or after 1 March 2019.

According to HMRC’s figures 85% of SDLT returns are already filed within 14 days of the relevant transaction. The SDLT return form will also be simplified by reducing the number of questions.

The Scottish Land and Buildings Transaction Tax (SLBTT) came into force on 1 April 2015 and replaced SDLT in Scotland, whilst the Welsh Land Transaction Tax (WLTT) replaced SDLT in Wales from 1 April 2018.