Buying a Property and Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is the tax payable when you buy a property or piece of land. The amount you pay depends on the value of the property, and whether you are an individual, a company or an investor.

Buying a property as an individual

Currently in England, if you and any other joint owners are first-time buyers and your property purchase is under £500,000, you do not pay any SDLT. Otherwise, SDLT is payable on residential properties over £125,000.

There are different bands of SDLT. The amount you pay depends on the purchase price, whether it is a freehold or leasehold, and whether you own any additional properties.

If you are buying a residential freehold property and you own no other properties, you pay –

  • Nothing on the first £125,000Buying a Property and Stamp Duty Land Tax
  • 2% on the portion between £125,000 to £250,000
  • 5% on the portion between £250,001 to £925,000
  • 10% on the portion between £925,001 to £1.5 million
  • 12% on anything above £1.5 million

So, if you buy a property for £250,000, you pay nothing on the first £125,000 and 2% on the second £125,000. If you buy a property for £300,000, you pay nothing on the first £125,000, 2% on the second £125,000 and 5% on the remaining £50,000.

The rules for leasehold properties are much the same. However, if you are buying a new residential leasehold property, there may be additional SDLT if the net present value is more than £125,000.
If you already own a property, an extra 3% is added to the SDLT bands listed above.

The thresholds are different for non-residential and mixed-use property, such as commercial property and agricultural land. The first £150,000 is tax-free. This is outlined in greater detail below.

Buying a property as a company

If you are buying a property as a corporate entity, also known as ‘non-natural person’, the amount of SDLT depends on whether you are buying a residential property or a non-residential/mixed-use property.

For companies buying residential properties worth more than £500,000, the rate of SDLT is 15%. There are no bands. However, there are some exceptions to this rule. This includes farmhouses and properties that are to be occupied by employees.

For companies (or individuals) buying non-residential or mixed-use property, the rate of SDLT is lower.

You pay –

  • Nothing on the first £150,000
  • 2% on the portion between £150,001 to £250,000
  • 5% on anything above £250,000

Buying a property as an investor

If you are buying a property as an investor, then it is very likely that you already own at least one property. If so, you will be subject to the 3% surcharge. This mean you will pay –

  • 3% the first £125,000 (unless the purchase price is below £40,000)
  • 5% on the portion between £125,000 to £250,000
  • 8% on the portion between £250,001 to £925,000
  • 13% on the portion between £925,001 to £1.5 million
  • 15% on anything above £1.5 million

If you do not already own a property, SDLT is calculated as though you were buying a residential property. However, you may not be eligible to certain reliefs as a buy-to-let investor, such as the first-time buyer relief.

Contact us now

You need to factor in the costs of Stamp Duty Land Tax when buying a property. We can help you understand how much you will be liable to pay.

To speak to a solicitor, please contact us at Garner & Hancock Solicitors for a free consultation. Call us on 020 3870 3676  and speak to James Harrison or Gurdev Mann,  or fill in the free online enquiry form and we will call you back.

 

If you would like to attend our Free Myth Busting Seminar at Hilton Syon Park at 7.00 pm on Wednesday 6th November 2019 please click below to register 

FREE MYTH BUSTING SEMINAR – 10 Questions you think you know the answer to…