Stamp duties
Written by Ray Coman
The Stamp Duty Land Tax (SDLT) calculation was altered for residential properties for properties exchanged on or after December 2014 and for commercial properties on or after 17 March 2016. The previous rate calculation can be viewed in the 2016 archive.
| Residential property | Since 4 December 2014 |
| Up to £125,000 | Zero |
| Over £125,000 to £250,000 | 2% |
| Over £250,000 to £925,000 | 5% |
| Over £925,000 to £1.5 million | 10% |
| Over £1.5 million | 12% |
| Over £500,000 (companies) | 15% |
As an example, for a property sold at £1 million, the calculation is:
0% on the first £125,000
2% on the next £125,000 (or 2,500)
5% on the next £675,000 (33,750)
10% on the remaining 75,000 (or £7,500)
The total SDLT would therefore be £43,750.
From 21 March 2012, UK property acquired by companies and similar corporate bodies, regardless of where the company is resident, are taxed at a higher rate of SDLT.
An explanation of the rates which apply to Wales and Scoptland can be found in the guide on property taxes.
For freehold non-residential properties the rates are as follows:
| Commercial property (freehold) | Since 17 March 2016 |
| Up to £150,000 | Zero |
| Over £150,000 to £250,000 | 2% |
| Over £250,000 | 5% |
For leasehold commercial property, SDLT is calculated on the lease premium and then separately on the net present value of the rental. The two liabilities are added together to determine the total stamp duty payable.
For leasehold non-residential properties the rates are as follows:
| Commercial property (leasehold) | Since 17 March 2016 |
| Up to £150,000 | Zero |
| Over £150,000 to £5 million | 1% |
| Over £5 million | 2% |
Stamp duty land tax (SDLT) is charged at a fixed percentage on consideration for the transfer of land. There is no stamp duty where the transaction is a gift, a transaction on divorce, or certain variations of a will.
Transfers on the incorporation of a limited liability partnership, where the transferor is a partner are also exempt from SDLT.
With effect from 1 April 2016, an additional 3% stamp duty will be payable on the purchase of a second residential property. On the same residence, the individual who already owns a property will pay 3% more than the individual who does not.
This measure will impact prospective buy-to-let investors and those seeking a home in two locations.
Comments
Broadly, gifts of property are no subject to stamp duty. However, if you also transfer a mortgage the debt element is not a gift. In that case you could have some stamp duty. However, my advice would be to seek further guidance from a conveyance solicitor as they routinely deal with Stamp duty.