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Changes to Stamp Duty Land Tax; will you be affected?

View profile for Jenny Colvin
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The landscape of Stamp Duty Land Tax (SDLT) has changed significantly over recent years, mainly for first time buyers.  That landscape is set to change once more on 1st March as the deadline for submitting SDLT returns will reduce.  Jenny Colvin, Associate Solicitor in our Portsmouth Commercial Property team, explains the change and your responsibilities regarding SDLT.

Stamp Duty Land Tax submission

SDLT is the tax payable when buying property or land over a certain value and requires a tax return to be submitted to HM Revenue and Customs, usually with a payment of tax.  Currently, the threshold for paying SDLT is £125,000 for residential properties and £150,000 for non-residential land and properties. 

“For the most part, these returns are submitted on your behalf by your conveyancer, however as they are a personal tax return, the liability ultimately falls with you as the purchaser,” explains Jenny. “You should therefore ensure that any forms and additional information requested by your conveyancer are completed, signed and returned to them as soon as possible. Delays in submitting the return can lead to financial penalties starting at £100 and rising the later the return and tax is submitted.”

The change in submission date will affect both residential and commercial purchasers, and those taking a commercial lease that attracts SDLT.

How much Stamp Duty Land Tax do I need to pay?

The rates of SDLT will depend on your situation and the property you are buying.  For residential purchases, if you are a first time buyer then you may be exempt from paying SDLT if the property you are purchasing is under £300,000; anything then between £300,001 to £500,000 is charged at 5% on the portion in between.   There are certain criteria that must be met in order for you to be classified as a first time buyer, and if the property you are purchasing is over £500,000 then you fall into the category of payments detailed below.

For those who are already on the property ladder the rates are:

  • Up to £125,000 – 0%
  • For properties between £125,001 to £250,000 - 2% on this portion
  • For properties between £250,001 to £925,000 - 5% on this portion
  • For properties between £925,001 to £1.5 million - 10% on this portion
  • For properties above £1.5 million - 12% on the remaining portion

For commercial properties the rate is 0% for properties up to £150,000 with 2% charged for the portion between £150,001 and £250,000.  It then rises to 5% for commercial properties over £250,000. 

There are occasionally reliefs available on both residential and commercial properties and in some scenarios higher rates of tax to pay, so we would always advise discussing your situation with your legal advisor.  If you have questions about SDLT and how it may apply to your purchase or lease, please contact Jenny Colvin in our Commercial Property team on 023 9277 6558, or Genni Cooper in our Residential Conveyancing team on 01329 222099.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.