Stamp Duty Land Tax
Whether buying a commercial premises, investing in a buy-to-let property
or just moving house, it’s important to understand the recent changes in
Stamp Duty Land Tax (SDLT).
Stamp duty land tax is a charge payable whenever you buy a property or land, even if it’s just a share. Taxation is on a sliding scale, starting at £125,000 for residential properties and £150,000 for commercial, multi-use properties and land.
The rate paid depends on a number of factors:
-Whether it’s a commercial or residential property
-The purchase price (the ‘consideration’)
-Other properties you own
-Whether it’s freehold or leasehold
-Whether the purchase is as an individual or a corporate body
-Any related transactions
The gov.uk website provides guidance on how to calculate stamp duty for non monetary payments.
SDLT for commercial vs residential properties
For both commercial and residential properties, you will have to pay SDLT on increasing portions of the property price.
Here is a quick guide on SDLT.
The maths can get a little tricky, so to make things easier you can use the government’s online SDLT calculator.
Higher charges for second homes and buy-to-let
If you already own a property, you will have to pay a 3 per cent surcharge on your SDLT. However, if you will be selling your current residence within the next 36 months, you can download an application form to apply for a refund.
If you exchanged contracts before the 26 November 2015 then you may not have to pay the surcharge.
SDLT for leasehold properties is slightly different to freehold properties.
If you’re buying a leasehold property, whether commercial or residential, then you’ll pay SDLT on the purchase price of the lease using the same rates as for a freehold property (see the tables above).
For residential properties if the total rent you’ll pay over the life of the lease works out as more than £125,000, then you’ll also pay 1 per cent
SDLT on the portion that is above £125,000
For commercial leasehold properties, if the total rent you’ll pay over the life of the lease is more than £150,000, then you’ll pay 1 per cent on any portion between £150,000 and £5 million, and 2 per cent on any portion above that.
Buying a residential property as a corporate body
As of November 2015, if you buy a residential property as a company, a partnership or as part of a collective investment scheme, then you will have to pay 15 per cent STLD on any residential properties that cost more than £500,000.
There are exceptions to this rule. The 15 per cent rate won’t be applied if the company is acting as a trustee of a settlement or if the property:
-Will be used for a property rental business
-Has been bought by a property developer and trader for development
-Will be made available to the public
-Has been acquired by a financial institution in the course of lending
-Will be occupied by employees
-Is a farmhouse
For further information contact APS!
Attached below is a simple guide to SDLTBack