Stamp Duty Land Tax (SDLT) is a payment almost every person has to pay when they buy a property in the UK. It’s a tax on the transfer of the deed of the land or property into the new owner’s name, and it’s a charge that can easily take a buyer by surprise. Here’s some information on how this tax works, who has to pay this tax, and how to work out your payment with a SDLT calculator.
SDLT on Your First Property
When you buy a property for the first time, you get quite a steep reduction of this tax, which makes this an important investment decision because you only get to use it once. In these situations, you will pay 0% SDLT on properties up to £300,000 and just 5% on properties from £300,001-£500,000, which is a significant saving.
SDLT on Your Main Residence
When you buy a main residence, you get a reasonable discount on this tax.
SDLT is banded, so you pay more tax the more valuable your property is within certain amounts. You will pay 0% on the first £125,000 value of the home, followed by 2% on the amount from £125,001 – £250,000, the 5% on the amount from £250,001-£925,000. However, it’s important to remember that if you are a non-UK resident, you’ll have to pay an additional 2% surcharge on each of these bands.
SDLT on Your Second Home or BTL Property
If you purchase a second home, whether it is a holiday home or a property you want to rent out for investment purposes, a different SDLT applies.
Here, you will pay 3% on the first £125,000 value of the home, 5% on the amount from £125,001 – £250,000, 8% on the amount from £250,001-£925,000, and 13% on the amount between £925,001-£1.5 million.
If you are considering adding property investments to your portfolio or becoming a landlord, it is therefore especially important to use a SDLT calculator or talk to your broker so that the increased tax does not negatively impact your financial situation.
SDLT on Properties Outside of England and Northern Ireland
Most countries have some form of transfer tax or land purchase tax, including Scotland and Wales where it is called Land and Buildings Transaction Tax and Land Transaction Tax respectively. These work on similar banded systems with discounted rates for first-time buyers, main residence buyers, and BTL investors, but the value within the bands and the taxation rates differ, so it is important to use a SDLT calculator specific to those regions.
If you are considering a second property or a BTL property, it’s a good idea to talk to an independent, qualified mortgage advisor who can calculate these taxes and advise you accordingly.
