- Accounts submitted to HMRC & Companies House
What is Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is a charge that applies when purchasing land. You can buy a movable building but not pay SDLT. The land, not the building, will cost you SDLT. SDLT needs to be paid to HMRC within 14 days of the purchase. Most conveyance solicitors will want you to pay this money over to them sooner to prevent the risk of non-payment. The SDLT liability is documented on the SDLT1 form, prepared by the conveyance solicitor, which is submitted to HMRC within 14 days of the property purchase.
The conveyance solicitor will do this via the SDL1 form submitted to HMRC within 14 days of the property purchase.
Please note that you do not pay Stamp Duty Land Tax on a property worth less than £40,000. This article is relevant for first time home buyers, people buying a second home, property investors, property developers and those who have a holiday home or holiday let.
How much Stamp Duty Land Tax is payable when buying a residential buy to let property?
Residential property Stamp Duty land transaction tax is a banded rate in England or Northern Ireland. It is a scaled charge. If you buy a property for £300,000 then the following Stamp Duty Land Tax charge will apply
|Up to £125,000||Zero|
|From £125,001 to £250,000||2%|
|From £250,001 to £925,000||5%|
|From £925,001 to £1.5m||10%|
£0 – 0% X £125,000
£2,500 – 2% X £125,000 (£250,000 less the previous SDLT band of £125,000)
£2,500 – 5% X £50,000 (£300,000 less the previous SDLT band of £250,000)
£5,000 is the total SDLT charge applied to a property value of £10,000.
If you sell your own home and buy another home, you will not have to pay the additional 3% on that property. We advise many of our clients to sell their current home to a third party or to their own limited company to avoid this SDLT higher rate.
2% SDLT surcharge for Foreign investors buying UK property
The 2% SDLT foreign surcharge measure will apply to land transactions with an effective date of 1 April 2021.
Where contracts are exchanged prior to 11 March 2020 but complete or are substantially performed on or after 1 April 2021, transitional rules may apply. Transitional rules may also apply where a contract is substantially performed on or before 31st March 2021 but does not complete until 1st April 2021 or later.
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