Tax on Buying Property
If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings.
What is Stamp Duty Land Tax?
SDLT replaced Stamp Duty in December 2003 and is a tax on the purchase price of land and buildings. When you buy a property or take on a lease you may have to pay SDLT.
If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and five per cent of the whole purchase price. See the table below for more detail.
If the purchase price is £125,000 or less you don’t pay any SDLT.
If you are a first-time buyer the threshold for when you start to pay SDLT is £250,000. This is only if you have never owned a house or flat in the UK or anywhere else in the world. If you are buying with someone else they must never have owned property before either. This higher threshold applies to purchases made on or after 25 March 2010 and before 25 March 2012.
|Purchase price of residential property||Rate of SDLT||Rate of SDLT first-time buyers|
|£0 – £125,000||0%||0%|
|£125,001 – £250,000||1%||0%|
|£250,001 – £500,000||3%||3%|
|£500,001 – £1 million||4%||4%|
|£1 million or more||5%||5%|
You can check current rates of SDLT on the HM Revenue&Customs (HMRC) website.
SDLT Disadvantaged Areas Relief
If you buy property in an area designated by the government as ‘disadvantaged’ you may qualify for Disadvantaged Areas Relief. In this case the threshold for SDLT is £150,000. If you are a first-time buyer you don’t need to apply as the threshold for first-time buyers is higher.
In October 2007 a relief from SDLT was introduced for zero-carbon homes. All qualifying houses under £500,000 are exempt and houses bought for £500,000 or above will have their SDLT bill reduced by £15,000.