What you need to know about SDLT when purchasing property

In a bid to boost growth, changes to Stamp Duty Land Tax (SDLT) or stamp duty, were announced in September’s mini-Budget.

It was revealed that the zero rate band for stamp duty on residential property purchases in England and Northern Ireland would be doubled from £125,000 to £250,000, providing a saving of £2,500 per dwelling, and £6,250 for first time buyers.

This change delivers a tax saving for any house purchases above £125,000 as they do not pay tax on the first £250,000 of the property value, only on amounts above this.

For those purchasing an additional dwelling, they will still be subject to a three per cent higher rate of SDLT.

Bid to stimulate the market

In a bid to get the housing market moving, the threshold has risen from £125,000 to £250,000 on all properties, while the relief given to first-time buyers will increase from £300,000 to £425,000.

A 5 per cent rate still applies to the property price between £250,001 and £925,000

A 10 per cent rate still applies to properties priced from £925,001 to £1,500,000 and 12 per cent for properties over £1.5 million.

The maximum value of a property on which first-time buyers’ relief can be claimed has also increased from £500,000 to £625,000. Potentially increasing the relief to a maximum of £8,750.

Any excess between £425,000 and £625,000 is subject to five per cent SDLT. First-time buyer relief is not available on properties over £625,000.

Where surcharges apply

For those who are purchasing a second property or further properties, the extra three per cent surcharge applies.

Anyone buying an additional residential property for £40,000 or more must pay the surcharge, whether it’s a holiday home or a buy-to-let.

The surcharge increases for more expensive properties.

For example:

Property value                                                                                                                SDLT rate

  • Up to £250,000                                                                                             3 per cent
  • The next £675,000 (difference between £250,001 to £925,000)                 8 per cent
  • The next £575,000 (difference between £925,001 to £1.5 million)           13 per cent
  • The remaining amount (difference between £1.5 million)                          15 per cent

Non Resident purchasers increases rates by a further 2 per cent.

SDLT is a devolved issue for Scotland and Wales where separate rules apply.

Thinking of buying a property or multiple properties? Contact us today for advice on SDLT.

Posted in Blog.