An Overview on Stamp Duty Land Tax (SDLT)

Note: This article looks at the Stamp Duty and equivalent taxes associated with freehold residential property transactions. It doesn’t cover property transactions before 16 December 2022. This article was last updated 04 January 2023.

Overview

Stamp Duty Land Tax (SDLT) is payable by the buyer on a property over a certain price in England and Northern Ireland. It is a progressive land tax that increases with the value of your property when you buy property in the UK, although some exemptions do apply. 

The type of tax differs depending on the location of the purchased property: 

• For England & Northern Ireland - Stamp Duty Land Tax (SDLT) 
• For Scotland – Land and Buildings Transaction Tax (LBTT)
• For Wales – Land Transaction Tax (LTT)

How & when to pay

This will usually be done on your behalf by your solicitor or conveyancer on the day of your completion. Your solicitor will ask you to include this in the monies you send them to complete your purchase. If they do not do this for you, you can file a return and pay the tax yourself. 

Note: It’s important to do this on time, as you may be charged penalties and interest for late payments.

Here are all the deadlines for different parts of the UK:

The standard tax rates are as follows: 

Stamp Duty standard rates

Scotland: Land and Building Transaction Tax standard rates

Wales: Land Transaction Tax standard rates

It’s worth noting that the Stamp Duty you pay will vary based on your circumstances. Let’s look at the main factors that’ll influence your Stamp Duty costs:

• You’re a first time buyer

Applicability: England & Northern Ireland

✅ If you’re buying your first home in England or Northern Ireland, and intend to live in it, you may be eligible for the First Time Buyer relief. This is only applicable where all the buyers are eligible, and the purchase price is below £625,000. Property purchases above £625,000 will incur the standard SDLT rate stated above. If you are eligible, you won’t need to pay SDLT up to £425,000, and will only pay 5% from £425,001 to £625,000. 

Applicability: Scotland

✅ Similar to England, Scotland also has First Time Buyer relief. If you buy a property for the first time and plan to use it as your main residence, you won’t need to pay the Land and Building Transaction Tax (LBTT) for your first purchase of a property up to £175,000. It’s important to note that if you’re buying with someone who isn’t a first time buyer, you may lose the First Time Buyers relief and would be required to pay the full LBTT on the property. However, unlike Stamp Duty rules in England and Northern Ireland, you won’t lose the First Time Buyers’ relief if the property exceeds a certain threshold, though different rates apply. 

❌ Please note that there is no First Time Buyers’ relief in Wales.

• You’re buying a property worth less than £40,000

Applicability: England, Northern Ireland, Scotland & Wales

✅ Properties under £40,000 incur no stamp duty. This applies regardless if you’re a first time buyer, or buying an additional property.

• You’re a non-UK resident

Applicability: England & Northern Ireland

✅ If you are a non-UK resident and your property is in England or Northern Ireland, you’ll usually have to pay a 2% surcharge on your SDLT. This would be a surcharge on top of any other rates of SDLT which may apply, such as whether you are buying an additional property (see below). 

Whether or not your transaction is considered a non-resident transaction can depend on several factors, such as who you are buying it with. For the purposes of your transaction, broadly speaking, you’re a non-UK resident if you weren’t in the UK for at least 183 days during any continuous period of 365 days falling within the relevant period (beginning 364 days before the effective date of the transaction, and ending 365 days after the effective date of the transaction). For further information, we’d recommend you consult your legal or tax advisor.

❌ There are no equivalent provisions in Scotland and Wales. 

• You’re buying an additional property

Applicability: England, Northern Ireland, Wales

✅ If any of the buyers of the property or their spouses already own one or more property anywhere in the world, you may need to pay an additional 3% surcharge on the Stamp Duty for buying an additional property. This would be the case even if their spouses will not be purchasing the property together with you. However, if you are buying the property on your own, this surcharge may not be applicable if the property you’re buying will replace your main and only residence, as that would mean you do not own more than two properties on the date of completion.

Applicability: Scotland

✅ Scotland has an Additional Dwelling Supplement provision, which means that if you or any other buyers already own one or more residential properties anywhere in the world, you’ll usually need to pay a 6% surcharge on top of the standard LBTT rates. However, you may not need to pay the surcharge if you are replacing or selling your main and only residence within a certain time frame.

This list is not meant to be an exhaustive list of factors that may affect your SDLT, LBTT or LTT. More information is available on the GOV.UK website, Revenue Scotland website, Welsh Revenue Authority website.

This article is provided for your information only – you shouldn't view these as legal advice, tax advice, investment advice, or any advice at all. While we've tried to make sure this information is accurate and up to date, things can change, so it shouldn't be viewed as totally comprehensive. GetGround always recommends you seek out independent advice before making any investment decisions.