How can we help you with SDLT (Stamp Duty Land Tax)?

SDLT can sometimes be a very simple tax in theory, but more often, it can be quite complicated. In fact, the actual banding/rates are straightforward, but it is the many rules and reliefs that overlay those bandings that can create the complexity.

Our indirect Tax/SDLT experts can help keep you up to date and ensure compliance, whilst minimising the SDLT liability by using the appropriate relief and rules.

Often with SDLT, the legal profession will handle the physical acquisition of the property and the legal contracts and sale documents. However, not all legal firms will offer advice with SDLT, often telling the buyer to speak to their accountant, and not all accountants have a dedicated indirect tax team on hand to offer guidance and advice.

What SDLT services does Rayner Essex offer?

Whether commercial or residential property, it is often good practice to seek advice to ensure the right amount of SDLT is being paid at the right time.

For a commercial property where the property is being moved inter-group, then corporate group/restructuring reliefs may be available to remove SDLT liabilities.

For residential property, buying a main residence/family home, and for developers or buy-to-let landlords with a portfolio of properties, there can be additional SDLT rates to consider.

In addition, non-UK resident buyers of residential property may also be subject to additional SDLT rates relating to the non-resident nature of the buyer, whether that be a corporate vehicle or personal. Non-residentNon-resident SDLT can be reclaimed, where UK residency conditions are met.

SDLT only applies to property transactions in England.  

For property transactions that take place in Scotland, the tax is named Land and Buildings Transaction Tax

For property transactions in Wales, the tax is named Land Transaction Tax 

Rayner Essex can advise in relation to England, Scotland and Wales.

What SDLT accounting services does Rayner Essex provide?

SDLT Liabilities

We can collate all of the relevant facts of the purchase, consider the residency tests and whether other dwellings are owned. We also take into account any divorce proceedings to calculate the correct amount of SDLT so that the legal team can file a correct SDLT1 declaration to HMRC.

In addition, our team will consider reliefs such as those applicable when purchasing mixed properties, whether any linked transactions may alter the final value of the SDLT or where additional SDLT is payable, such as a non-UK resident owner or where a house buyer has not sold their previous main residence before acquiring their new main residence. 

Not forgetting that SDLT can also be applicable with lease agreements.

SDLT – Residential Rates – As of 01 June 2024

Property or lease premium or transfer value	SDLT rate
Up to £250,000	Zero
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

SDLT – Commercial Rates – As of 01 June 2024

Property or lease premium or transfer value	SDLT rate
Up to £150,000	Zero
The next £100,000 (the portion from £150,001 to £250,000)	2%
The remaining amount (the portion above £250,000)	5%

When is SDLT Applicable?

You pay SDLT (or the Scottish/Welsh equivalents) when you:

• Buy a freehold property
• Buy a new or existing leasehold
• Buy a property through a shared ownership scheme 
• Transfer land or property in exchange for payment, for example, you take on a mortgage or buy a share in a house

First Time Buyers 

There is a higher starting threshold for SDLT when buying your first residential property.  It means that there will be no SDLT to be paid up to the first £425,000 of the property price, and then 5% SDLT on the portion from £425,001 to £625,000

Eligibility is where the buyer and anyone else buying with the buyer are first-time buyers.

Where the price of the first-time property is over £625,000, then there is no first-time buyer relief at all. In other words, the first-time buyer relief is only in play for properties up to £625,000

For companies with common ownership and control, there may be scope to form a VAT group. Transactions between companies within a VAT group will not need to charge VAT to each other – improving cash flow and simplifying intercompany accounting.  

Higher Rates for Additional Residential Properties

When purchasing a dwelling (apartment, house, etc) and where the conditions are met, there may be an additional 3% SDLT applied in addition to the SDLT rates applicable for residential purchases. For example, where the first£250,000 of the property price is Nil SDLT, where the higher rate applies, then £3 will apply to this first £250,000 banding.

The main triggers for the higher rate are where the purchaser is either a Ltd entity or where an individual already owns more than one main residence. For example, if a UK resident purchases a second home – unless they sell the old residence and make that second apartment their new residence  – then the 3% higher rate will apply.

Where there is a delay in selling the previous main residence, the higher rate is still applicable until the previous main residence is sold. There are also time limits to when the sale must take place if the higher rate SDLT is to be claimed back.

Non-resident additional rate when purchasing dwellings

If the buyer of a residential property is not a UK resident for at least 183 days (6 months) during the 12 months before purchase, then the buyer is deemed to be ‘non-UK resident’.

In this situation, there is an additional 2% SDLT applicable in addition to the existing SDLT bandings for residential property.

The higher rate of 3% SDLT is also applicable if the property being purchased is not going to be the main UK residence of the buyer, so it is, therefore, possible for an overseas buyer of an apartment to pay 3% higher rate plus the 2% non-resident rate + the normal SDLT bandings.

It is possible to reclaim this 2% additional rate from HMRC if the buyer can prove that they have since become resident in the UK for the aforementioned minimum period of time.

Multiple Dwelling Relief (MDR)

This relief was formally withdrawn with effect on the 1^st of June 2024 and is no longer applicable for new property purchases in England.

Both Scotland and Wales still operate a relief that is similar to Multiple Dwelling relief, but neither of the devolved governments has yet removed their equivalent reliefs.

Commercial Property 

Commercial property purchases are usually fairly straightforward when it comes to calculating SDLT liabilities.

The complications can arise when moving properties within a corporate group when trying to extract a property from a corporate group into personal ownership/dividend in specie, with sub-sales or restructuring transactions, and more often when issuing new or renewing leases.

In these situations, it is important to understand the full transaction and from that, apply the correct parts of the legislation to ensure compliance and the correct amount of SDLT is paid at the correct time.

Additional complications arise when purchasing mixed-use property, where a mixture of residential and commercial property is being purchased at the same time or via linked transactions. That can potentially mean the residential element of the purchase is treated the same as commercial property and availing of the generally lower non-residential SDLT rates whilst also negating the higher rates associated with acquiring a residential property into a corporate entity.

VAT 

Commercial property often involves questions of VAT, whether VAT is chargeable or not (depending on whether the seller has opted to tax the property, and whether the sale is a transfer of a Going Concern, for example). There are also benefits in having both the SDLT and VAT advice combined so that the optimal outcomes are there for the buyer or seller.

What type of businesses do we help with SDLT?

You may be an established business and have your dedicated accountant, and simply require SDLT advice, we are happy to help whatever your situation.

What are the unique benefits of working with Rayner Essex for SDLT services?

Rayner Essex is a Partner and Director led, a client-focused practice, providing our clients with the attention required and a strong emphasis on availability, service, and response. With over 50 years experience of working with corporates, SMEs, and private individuals from various industry sectors, we deliver quality VAT, SDLT, Tax, compliance, accounting, and advisory services, offering extensive expertise and adding value to our clients.

We understand that all businesses are different, which is why we take time to get to know you personally. We work closely with you to understand your aspirations and SDLT obligations, so that we can deliver tailored solutions, ensuring your business is compliant on all levels, guiding you through your tax and SDLT processes, and offering you solutions you can trust.

Whether you have an ad hoc SDLT requirement or are looking to change your Accounting and SDLT advisory providers, at Rayner Essex we will offer you the attention to detail that you require, fully aligned with your business goals. Our SDLT and VAT experts are here to assist you with any SDLT and VAT services you may require.