What Tax Do You Pay When Buying Land and Property in The UK?

The tax payable when buying a property in England and Northern Ireland is Stamp Duty Land Tax (SDLT). In Scotland the tax is called Land and Buildings Transaction Tax (LBTT).  In Wales it is called Land Transaction Tax (LTT).   These taxes are calculated in a similar manner and are based on the purchase price of your property and vary according to whether it's a residential or non-residential property, and whether you're a first-time buyer. Stampback, help their clients check they have paid the correct amount of tax and seek a refund where necessary.

Stamp Duty Land Tax (SDLT)

This is the tax that homebuyers in England and Northern Ireland have to pay. It is a one-off payment made to HMRC (Her Majesty’s Revenue and Customs) and the amount you pay depends on the price of the property or land you are buying.

In England and Northern Ireland first-time buyers of a residential property are exempt from SDLT of £425,000 on properties worth up to £625,000. In Scotland first time buyers are exempt up to £175,000.  There is no first time buyer’s relief in Wales.

 

What are the Stamp Duty Land Tax (SDLT) bands on Properties in The UK?

In England and Northern Ireland:

For residential properties worth more than £250,000, the tax rates are:

  • 0% up to £250,000

  • 5% on properties above £250,000 and up to £925,000

  • 10% on properties above £925,000 and up to £1.5 million

  • 12% on properties above £1.5 million

For non-residential properties worth more than £150,000 the SDLT rates are:

  • 0% up to £150,000

  • 2% on properties above £150,000 and up to £250,000

  • 5% on properties above £250,000

 

In Wales

  • Land Transaction Tax (LTT)

  • 0% up to and including £225,000      

  • 6% over £225,000 up to and including £400,000      

  • 7.5% over £400,000 up to and including £750,000  

  • 10% over £750,000 up to and including £1,500,000 

  • 12% over £1,500,000                                                 

 

In Scotland

  • Land and Buildings Transaction Tax (LBTT)

  • 0% Up to £145,000                                        

  • 2% Above £145,000 and up to £250,000      

  • 5% Above £250,000 and up to £325,000      

  • 10% Above £325,000 and up to £750,000    

  • 12% Above £750,000                                                

 

Are Some Buyers Liable to Pay More Stamp Duty Land Tax (SDLT) Than Others?

You must pay Higher Rate Additional Duty (HRAD) Stamp Duty Land Tax (SDLT) rates when you buy a residential property (or a part of one) for £40,000 or more, if all the following apply:

  • It will not be the only residential property worth £40,000 or more that you own (or part own) anywhere in the world

  • You have not sold or given away your previous main home

  • No one else has a lease on it which has more than 21 years left to run

The HRAD rates are:

  • 3% Up to £250,000    

  • 8% from £250,001 to £925,000

  • 13% from £925,001 to £1.5 million

  • 15% On properties above £1.5 million

 

In Wales

  • Land Transaction Tax (LTT)

  • Higher Residential Tax (HRT)

  • 4% Up to £180,000                                        

  • 7.5% Above £180,000 and up to £250,000   

  • 9% Above £250,000 and up to £400,000      

  • 11.5% Above £400,000 and up to £750,000 

  • 14% Above £750,000 and up to £1,500,000 

  • 16% Above £1,500,000                                 

                                               

 

In Scotland

  • Land and Buildings Transaction Tax (LBTT)

  • Additional Dwelling Supplement (ADS)

  • 4% Up to £145,000                                        

  • % Above £145,000 and up to £250,000        

  • 9% Above £250,000 and up to £325,000      

  • 14% Above £325,000 and up to £750,000    

  • 16% Above £750,000                                                                        

 

 

Is It Possible To Claim Back the HRAD Element Of Your Stamp Duty Land Tax (SDLT) Payment?

If you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty payment.

You cannot get a refund if you or your spouse still own any part of your previous home

 

Are There Circumstances Where You Can Avoid Paying Stamp Duty Land Tax (SDLT) On Property in The UK?

There may be some circumstances in which you can avoid paying SDLT on property. For example, if the property is inherited from a spouse or civil partner, there is no SDLT due. Certain transactions are exempt from SDLT, please contact Stampback for more information.

Frequently Asked Questions

Here are 2 Frequently Asked Questions about taxes when buying a property in the UK.

1) Do I have to pay Stamp Duty Land Tax (SDLT) on inherited property?

There is no SDLT due on property inherited from a spouse or civil partner.

2) Do non-UK residents have to pay higher rates of Stamp Duty Land Tax (SDLT) on property purchases in the UK?

Different rates of Stamp Duty Land Tax (SDLT) apply to purchasers of residential property in England and Northern Ireland who are not resident in the UK. The rates are 2 percentage points higher than those that apply to purchases made by UK residents.  The surcharge applies to all ‘non-resident transactions’, even those where it is intended to live in the property being purchased.

 

The methods for calculating Stamp Duty Land Tax (SDLT) are broadly the same across England and Northern Ireland, Scotland and Wales.  As with any tax there are exceptions, anomalies and reliefs which are too numerous to list here.  If you think you may have overpaid contact Stampback who will be able to assess the situation and advise you accordingly. 

Lucas Vitale