Stamp Duty

What is Stamp Duty Land Tax?

Stamp Duty Land is a tax, collected by HM Revenue & Customs on certain types of transactions including property freehold and leasehold transactions.

Who pays Stamp Duty?

Stamp Duty is payable by the person who is acquiring the property in the case of a freehold purchase or the tenant in the case of a lease being signed

When and how does Stamp Duty have to be paid?

As part of the transaction process, the solicitor (or licensed conveyancer) handling the transaction for the new occupier will ask the occupier to sign a land transaction return form. The return gives all the information that is needed regarding the property transaction. The solicitor may complete the land transaction return; however the occupier is responsible for ensuring that the details on the land transaction return are accurate.

The completed land transaction return, and any payment of Stamp Duty Land Tax due, to the HM Revenue & Customs. As long as they receive the correctly completed land transaction return along with any relevant supplementary forms, and any payment due, they issue a certificate confirming that the Stamp Duty Land Tax has been paid.

How is Stamp Duty calculated?

The method of calculating the duty payable is different for freeholds and leaseholds transactions.

Freehold transactions (total price paid)

Rate           Residential                              Non-residential

Zero           £0 - £125,000                          £0 - £150,000
1%             £125,001 - £250,000                £150,001 - £250,000
3%             £250,001 - £500,000                £250,001 - £500,000
4%             Over £500,000                         Over £500,000

* Duty on residential sales in a small number of areas in England outside of Greater London is reduced through Disadvantaged Area Relief.

New leases (lease duty) Duty on rent

Rate           Net Present Value of Rent

                   Residential                              Non-residential
Zero           £0 - £125,000                          £0 - £150,000
1%             Over £125,000                         Over £150,000

Is Stamp Duty payable on lease premiums?

Duty on premium is the same as for transfers of land (except special rules apply for premium where rent exceeds £600 annually).

Stamp Duty Calculators

Freehold Property transactions

www.sdcalculator.inlandrevenue.gov.uk/SDProperty.aspx

Leasehold Property transactions

www.ldcalculator.inlandrevenue.gov.uk/

For further information on Stamp Duty Land Tax see HM Revenue & Customs website

www.hmrc.gov.uk/so/index.htm