Stamp Duty Land Tax (SDLT) is charged on both property and land transactions in the UK, whenever the value of the asset exceeds certain thresholds.

Up until 4 December 2014, SDLT was paid at a set rate for the entire price of the property.  However, it is now charged at increasing rates for each portion of the cost.

If you exchanged contracts on or before 3 December 2014 and completed on 4 December 2014 or later you can choose to pay SDLT at the old or new rate.

These are the new rates of SDLT for properties in the UK:

On residential properties

Nothing on the first £125,000 of the property price.

2% on the next £125,000

5% on the next £675,000

10% on the next £575,000

12% on the rest (properties above £1.5 million)

For instance, when purchasing a property of £275,000, you'll pay £3,750 of SDLT.  This would be broken up as follows:

Nothing on the first £125,000

£2,500 on the next £125,000

£1,250 on the remaining £25,000

HM Revenue and Customs (HMRC) have set up a useful SDLT calculator tool in order to work out how much you'll pay on your property.  You can find it here.

For corporate properties

On any property bought by bodies such as collective investment schemes and professional companies, SDLT is charged at a flat rate of 15%.

However, there are some exceptions.  SDLT is based on the new rates and bands whenever a property is used for:

A property rental business

A property development or resale trade

Providing admission to visitors on a commercial basis

Residential leases

If your residential lease is for more than £125,000, SDLT is 1% on any amount above the £125,000 threshold.

Non-residential and mixed-use properties

For these properties, payments are as follows:

Nothing on the property price up until £150,000 (when the annual rent is less than £1,000)

1% on properties up to £150,000 (when the annual rent is above £1,000)

1% on properties between £150,001 and £250,000 (rent of £1,000 or more)

3% on properties between £250,001 and £500,000 (rent of £1,000 or more)

4% on properties over £500,000 (rent of £1,000 or more)

Again, the SDLT Calculator is available if you need a quick estimate as to how much you'll be required to pay.

Exceptions and special rules

In some cases, there may be slight exceptions to SDLT, for example when:

You buy two or more properties from someone you have connections with (such as a relative or business partner).

You buy property through a shared ownership scheme

You transfer ownership of a property through marriage, civil partnership, divorce, from a will or to a company.

Pall Mall Estates

If you're uncertain about Stamp Duty Land Tax, get in touch with Pall Mall Estates to find out how this could impact a purchase. Call us today on 020 8986 7221.

- Pall Mall Estates have a wide range of low cost commercial properties across the UK. Take a look at our available spaces here.

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