Stamp duty land tax

Things You Need to Know About Higher Rate Stamp Duty Land Tax (SDLT)

If you purchase a residential property or a part of it in England or Northern Ireland for £40,000 or above, you must pay a higher rate stamp duty on it as per the following conditions:

  • It will not be the sole residential property with a cost of £40,000 or above that you own (partly own) in the world
  • Your previous main residence/home is not disposed of or sold
  • Nobody has a lease on it with over 21 years

 

Higher Rate Stamp Duty applies to

Higher rate SDLT still applies, even if you want to live in the property that you are purchasing (it’s not concerned whether you already own a residential property or not). This rule applies to everyone, including the people who’re married or are civil partners.

Want to reduce your SDLT, reach out to us!

 

Rules for Married Couples and Civil Partners

The rules apply to both the spouses or partners as if they’re buying property together, even if they are not. If one of you need to pay higher rates, you need to pay it as a whole (unless you’re divorced).

 

Rules for Buying a Property with Someone Else

This rule applies to each person who’s involved in buying the property. If there’s a need to pay the higher rate by one, you must pay it as a whole.

 

Rules for Buying as a Trustee

The rule applies to the beneficiary of the trust as per the trust’s type.

 

What property the higher rate stamp duty apply to?

If these rules apply to you or your partner, you need to work out how many residential properties you own after your new purchases. If the worth of your property is £40,000 or above, a higher rate stamp duty applies to your new purchase unless there is any other reason. It also includes:

  • Property owned by parents on children’s behalf aged below 18
  • A property where you’re beneficiary of the trust

 

Add your present home, if you own it while buying the new property.

 

The Higher Rate Stamp Duty

The higher rates of SDLT from 8 July 2020 to 30 June 2021 are:

 

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If you are a non-UK resident, the rates are increased by 2% from 1 April 2021.

The higher rates of SDLT from 1July 2021 to 30 September 2021 are:

 

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If you are a non-UK resident, the rates are increased by 2% from 1 April 2021.

The higher rates of SDLT from 1 October 2021 are:

These rates are applicable if you purchased a property before 8 July 2020.

 

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Contact our property accountants for further assistance!

 

When Higher rates Stamp Duty do not apply?

Certain people, property and transactions are exempted from higher rate stamp duty.

 

People

The SDLT does not apply to a person who falls under both of these situations:

  • Using his new property as the main residence
  • Have sold or disposed of the last main residence he/she had, before buying a new one or on the same day

 

Property

Property is exempted from the higher SDLT if any of the following apply:

  • Having a total worth below £40,000
  • Mixed property, used for both residential and non-residential purposes
  • It’s is mobile like a houseboat, caravan house, etc

 

The rules are not applicable for a leased property if either:

  • The tenure of a lease is 7 years or less from the date it was granted
  • Someone else owns the lease and more than 21 years are remaining for the lease to end

 

Transactions

In case if you’re transferring the property ownership to your spouse, the higher rates are not applicable except that someone else is involved in the transfer. Moreover, if you want to increase the property value that you’re already owning, the higher rates are not applicable when all of the following apply:

  • Your ownership is 25% or more
  • Your residence/dwelling has been your sole home for the last 3 years
  • After the lease extension, your lease still has 21 years or more to end

 

Want to reduce your SDLT, reach out to us!

 

Reliefs

You can reduce the higher SDLT amount by availing reliefs like multiple dwelling relief. Find more about reliefs. If you are going to purchases 6 or more properties, you can choose from the below options:

  • non-residential rates of SDLT that are not higher
  • higher rates with multiple dwellings relief

 

What should you do?

  1. Send your SDLT return to HMRC within 14 days of the purchase
  2. Pay your SDLT bill after sending the return

 

How and when to get a refund?

In case you sold or disposed of your main residence/home within the three years of purchasing of a new home, you can ask for a refund of the higher SDLT rate from your Stamp Duty Bill. You can’t avail refund if:

  • Any part of your previous home is owned by you or your spouse
  • There are other reasons for a higher rate

 

Hope you have got information on higher rate stamp duty, for further details, feel free to contact our professional property accountants for expert advice and support.

 

Disclaimer:  This blog post is intended just for the general understanding of SDLT.

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