Stamp Duty Land Tax (SDLT) - Residential

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What is Stamp Duty Land Tax?

Stamp Duty Land Tax is charged by applying a range of percentages to slices of the chargeable consideration for the transaction.

Every year thousands of people overpay their Stamp Duty Land Tax on residential and commercial purchases, through misclassification of their property or simple lack of awareness of the numerous exemptions and reliefs which exist in a labyrinthine tax system.

As a rule, if the land consists entirely of a residential property and the purchaser is an individual and the transaction is on or after 1st April 2016 then the percentages in the standard residential rate section are applied. ​If the purchaser is purchasing an additional dwelling, then 3% loading percentages apply.

Amount of Tax chargeable:

Purchase Price Bands Basic Residential
SDLT Rates (%)
Higher Rate Transactions
SDLT Rates (%)
Up to 125,000 0 3
Above 125,000 and up to 250,000 2 5
Above 250,000 and up to 925,000 5 8
Above 925,000 and up to 1,500,000 10 13
Above 1,500,00+ 12 15

Non-residential or mixed-use rates:

Purchase Price Bands Percentage Rate (%)
Up to 150,000 0
Above 150,000 and up to 250,000 2
Above 250,000+ 5
stamp duty land tax residential service

Why does SDLT Overpayment occur?

HMRC’s Stamp Duty Land Tax calculator is only supposed to be a guide figure, it currently does not consider the most basic of calculations, such as the purchase of mixed-use land, least of all when it comes to the high level of transactions that just are not clear-cut.

For many solicitors, mortgage advisors and individuals HMRC’s calculator this is the main tool used to calculate SDLT rates. Here lies the problem.

This unrealistic expectancy of solicitors to be both property experts and tax experts at the same time could continue to leave homeowners overpaying their Stamp Duty, it’s no wonder why 1 in 4 calculation are currently done incorrectly.

What Could I Recover?

Amounts can vary dependent upon the property type and tax paid to HMRC. It is common for standard rates to be applied due to the calculation complexity that often lead to an over-payment of tax. In some cases, it’s possible to achieve up to 80% reduction in Stamp duty costs.

Take a look at our Residential SDLT brochure...

How do I know if my property would qualify?

When you are about to purchase a property there are some key features to look out for, such as:

  • Is the land over half a hectare?
  • Are there any commercial or non-residential buildings on the land, like stables or workshops?
  • Are there any annexes, flats or cottages in the grounds?
  • Are there any rights over or interest in land, that does not benefit the dwelling, for example, commons rights to pass through over nearby parkland?
  • Is there any element in the acquisition that indicates residential use, for example wayleaves, licenses and commercial rents?

In addition, there are also some Key words to look out for:

  • Paddocks
  • Stables
  • Granny Annex
  • Woodlands
  • Grazing Land
  • Office
  • Workshops
  • Lakes
  • Communal Gardens
  • Option Agreement

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    Pre-Completion Case Study:

    Mr Jones was purchasing a property in the Midlands for £2,290,000. His solicitor had quoted his Stamp Duty Land Tax liability at £257,250 by using HMRC’s online calculator. Fortunately, Mr Jones’ estate agent recommended our services and we were able to forensically analyse his upcoming purchase.

    The property had 6 acres of surrounding land, including a paddock that was managed by a local contractor. In addition, the purchase consisted of three dwellings: the main house, a two-bedroom apartment above the garage and a stable.

    After review we concluded that the correct SDLT rate payable for this transaction was £84,498 as two reliefs were applicable that HMRC’s calculator has no way of picking up.

    Mr Jones made a 67% Saving, that’s a total of £172,752.

    Post-Completion Case Study:

    Our Client Ms Parker purchased a new main residence in Warwickshire for £725,000. The land consisted of a four-bedroom property along with an annexe next door.

    A few months after purchase we conducted a forensic review of her property to see if she had paid the correct SDLT rate. As she has an additional dwelling on the grounds, she had overpaid her SDLT Liability by £10,000 (£26,250 – £16,250).

    We compiled a report and submitted it to HMRC requesting this refund. Upon review HMRC sent a cheque in the post confirming that our calculations were correct!

    What services are offered?

    Pre completion advice on upcoming property transactions

    For pre completion cases we forensically analyse your transaction prior to exchange of contracts. We can review all elements and ensure that you are paying the correct rates of SDLT upfront.

    Post completion, review of historical property transactions to ensure correct SDLT payment was made

    If its too late and you have already exchanged/completed on your purchase, we can review property transactions spanning back up to four years. We will conduct a forensic review and if your SDLT has been calculated incorrectly then we will write to HMRC on your behalf and request a refund directly.

    Advice on how to restructure your property portfolios including IHT and CGT advice

    Knowing how much Capital Gains Tax you may have to pay or how to structure your property portfolio to maximise profit from a tax perspective can be difficult. We can review your property portfolio and provide advice on how to achieve maximum savings.

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