SDLT – some good news for (most) buyers of residential property
As has been widely reported on the news the government has abolished the current system of SDLT (stamp duty land tax) under which it is levied at a single rate on the whole purchase price
It has replaced it with a system under which SDLT is charged at several rates according to the portion of the purchase price falling within each of several bands.
The new rules will apply only to residential property transactions that exchange and complete on or after 4 December 2014 (although see below if you have exchanged but not yet completed by that date). The new rates are compiled easily on the following link to Her Majesty’s Revenue and Customs’ Stamp Duty Land Tax Calculator:
http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
So, for example, for a purchase price of £300,000, under the new rules it is the first £125,000 that is taxed at 0%, the next £125,000 at 2% and the final £50,000 is taxed at 5%. This gives an SDLT charge of £5,000.
Under the old rules the charge would have been 3% of the whole price, i.e. £9,000
Generally it will be properties approaching the £1 million mark that will suffer. It has been calculated that the effective rate of tax for properties of £937,500 or less will be lower, or the same as, the effective rate of tax under the old rules.
Under transitional rules, buyers who have exchanged contracts before 4th December but not yet completed should be able to elect to pay SDLT under either the old or the new rules
Non-residential and mixed property are not affected by these changes.
Please contact Lynette Norris on 01943 60 11 73 or Ian Haynes on 01274 72 38 58 to discuss in greater detail. These are intended as guidance notes only and should not be taken as detailed legal advice for specific situations
