New Rates of Stamp Duty Land Tax
You will no doubt all be aware of the changes the Government enforced on the 23rd September 2022. One of the many changes the Government announced on the 23rd September 2022 was changes to the Stamp Duty Land Tax payable in England and Northern Ireland. This change was enforced to provide financial assistance in cutting the tax payable on certain transactions.
I am Melissa Noble and I work in the Scarborough Conveyancing Department as an Advanced Paralegal and deal with Stamp Duty Land Tax queries on a regular basis; I therefore wanted to prepare a blog providing a brief overview into Stamp Duty Land Tax and the recent changes in order to provide guidance to any prospective purchasers. This blog provides a brief insight into the changes which have been made and how they may affect you.*
Stamp Duty Land Tax (SDLT) is payable on purchases of property or land in England and Northern Ireland over a certain price (the tax payable for property or land in Scotland and Wales differs). SDLT will become payable on the purchase of freehold and leasehold property, property purchased through a shared ownership scheme, land or property transferred in exchange for payment etc. (please note, this is not an extensive list of when SDLT will become payable).
The amount of SDLT payable is dependent on the transaction in question i.e. whether the land or property is residential, non-residential or mixed use, whether any relief or exemptions are applicable (i.e. first time buyer’s relief), whether you are a non-UK resident etc. You will of course be advised of the SDLT payable dependent on your circumstances.
Within the Government announcement on the 23rd September 2022, the following changes were introduced to SDLT:
- The level at which people begin paying SDLT on a residential property was doubled from £125,000.00 to £250,000.00.
- The level at which first time buyers begin paying SDLT was increased from £300,000.00 to £425,000.00. Additionally, the Government now allows first time buyers to access the relief when they purchase a property costing less than £625,000.00 rather than the previous £500,000.00.
Given that the threshold was raised to £250,000.00, the standard percentage of the residential rates payable were thus amended. The following table indicates the percentage of SDLT payable on standard residential transactions:
| PROPERTY VALUE | STANDARD RESIDENTIAL RATES |
|---|---|
| £0.00 - £250,000.00 | 0% |
| £250,000.00 - £925,000.00 | 5% |
| £925,000.00 - £1,500,000.00 | 10% |
| £1,500,000.00 + | 12% |
The Higher Rates on additional dwellings apply to purchases of additional properties and are 3 percentage points above the standard residential rates, as delineated in the following table:
| PROPERTY VALUE | ADDITIONAL RESIDENTIAL RATES |
|---|---|
| £0.00 - £250,000.00 | 3% |
| £250,000.00 - £925,000.00 | 8% |
| £925,000.00 - £1,500,000.00 | 13% |
| £1,500,000.00 + | 15% |
Please note, changes were not made to the rates of SDLT payable for non-residential and mixed land and property transactions. For transactions involving non-residential or mixed (“mixed use”) land or property, the SDLT payable remains payable on increasing portions of the property price (or consideration) when you pay £150,000.00 or more. For information purposes, non-residential property includes: commercial property (i.e. shops or offices), property which is not suitable to live in, forests, agricultural land that is part of a working farm or used for agricultural reasons, any other land or property that is not part of a dwelling’s garden or grounds and 6 or more residential properties purchased in a single transaction. A “mixed” property is one which has both a residential and non-residential element i.e. a flat connected to a shop.
The changes made to the SDLT payable on the 23rd September 2022 is a permanent measure, applicable only in England and Northern Ireland (as stated previously, the rules differ for Scotland and Wales).
Pinkney Grunwells Conveyancing team are here to help and guide you throughout your property transaction and we are happy to talk you through any of the stamp duty changes.
*At Pinkney Grunwells Lawyers LLP, we can advise you on the standard basic rate of Stamp Duty Land Tax payable upon purchasing your property or land. However, there are a number of circumstances where the basic rate does not apply and a higher rate of Stamp Duty Land Tax is applicable, which means the amount of Stamp Duty you will have to pay is significantly more expensive than that payable on the basic rate. Please note, however, we are not tax advisors and it remains your obligation to ensure you tell us which rate applies to you so we can correctly complete the Stamp Duty Land Tax form on your behalf and make the relevant payment to Her Majesty’s Revenue and Customs on your behalf; we are not tax specialists and would always recommend you to seek independent tax advice about your possible Stamp Duty liability.
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