Stamp Duty Land Tax (SDLT) Services

How can we help you with Stamp Duty Land Tax?

Stamp Duty Land Tax, or 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.

What SDLT services does Rayner Essex offer?

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.

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.

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

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

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 – Commercial Rates

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%

Rates as of 01 June 2024

SDLT – Residential Rates

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%

Rates as of 01 June 2024

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, when you take on a mortgage or buy a share in a house

SDLT for Residential Properties

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 Dwellings (HRAD) Properties

When purchasing a dwelling (apartment, house, etc.) and where the conditions are met, there may be an additional 5% 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 5% 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 5% 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.

Not forgetting that there is already an additional 2% additional SDLT rate where the buyer of residential property is non-UK resident, such as non-resident UK companies or overseas based individuals. That means that a non-UK resident buying a dwelling could see their effective SDLT rates being as high as 17% on the basis that the highest SDLT band for residential property is 12%, plus 3% if a second home or being purchased by a corporate body and plus 2% if the purchaser is non-resident.

For example, if an individual purchases a second home as an investment or buy-to-let (BTL) property for £1 million, this property would be subject to the new SDLT surcharge rates. Since it is an additional property and not replacing their main residence, the following SDLT would apply:

Purchase price bands (£)	Percentage rate (%)	SDLT pre Budget 2024	From 31/10/24
Up to 250,000	3	7,500	12,500 (5% SDLT)
Above 250,000 and up to 925,000	8	54,000	67,500 (10% SDLT)
Above 925,000 and up to 1,500,000	13	9,750	11,250 (15% SDLT)
Above 1,500,000+	15	0	0
	Total SDLT due	71,250	91,250

Example as shown above.

There is an additional £20,000 SDLT as a result of the 2% increase to the existing 3% surcharge. If the purchaser is non-UK resident then a further 2% in addition to the 3% applies and note that the now 5% surcharge and 2% non-resident surcharge has no nil rate band so the 5%+2% applies to the whole value of the property, which is then in addition to the existing SDLT bandings.

The single rate of SDLT charged on dwellings costing more than £500,000, when purchased by corporate bodies, has increased by 2 percentage points from 15% to 17%, effective from 31 October 2024. Various reliefs may be available for corporate property purchases to remove or reduce this charge, but as with all tax matters, the SDLT due will depend on the specific circumstances of each transaction.

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 5% 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 5% 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.

SDLT for Commercial Properties

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.

Mixed-use properties

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.

Sole traders

Partnerships

Limited companies

Start-up businesses

Small owner-managed businesses

Medium sized businesses, Corporates

Private clients and individuals

Multinationals

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. 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 experts are here to assist you with any SDLT and VAT services you may require.

SDLT FAQs

Who Pays SDLT?

SDLT is paid by the buyer of the land/property. In the context of a lease, it is the tenant that is liable for the SDLT.

How is SDLT calculated?

There are two different SDLT tables, the first deals with non-residential property (commercial property such as offices, factories, warehouses and bare land) and the second deals with residential property (houses, apartments and flats). Where a property consists of both residential and non-residential, such as a typical high street shop with a flat above, then the non-residential rates are used. For commercial property, SDLT is calculated on the VAT-inclusive price. There are additional rates of SDLT applicable for second homes and for buyers/tenants who are not UK residents and there is also a potential variety of reliefs depending on specific circumstances of the purchase.

When is an SDLT return not required?

There are certain scenarios where an SDLT return is not required to be filed, however, there are also some circumstances where, despite the SDLT liability being Nil, an SDLT return must still be filed to HMRC. It is therefore generally suggested to seek specialist advice as to whether an SDLT return is required for filing.

If there is a gift with no debt, loan or mortgage secured on it this would likely be exempt from SDLT. We would recommend you seek advice to discuss your specific circumstances to establish whether you have an SDLT liability.

Can SDLT be capitalised?

SDLT is a tax and generally taxes are seen as expenses rather than a capital cost, but SDLT can often be a significant cost to the business. It may be possible to capitalise SDLT costs but is a multi-factorial approach with other taxes and the specific circumstances of the transaction. SDLT legislation is generally complicated and often there is no simple yes/no answer when dealing with these types of queries.

Meet our SDLT and VAT experts

If you want to find out more or to discuss your specific business requirements, don’t hesitate to get in touch. Our Chartered accountants in London and St Albans accountants below will be happy to help.

Jason Croke

Director

Contact Jason Croke

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