How You Can Save on Stamp Duty Land Tax and Make Property Purchases Less Expensive

If you’re buying a house or land, you’ll have to pay a hefty sum in Stamp Duty Land Tax (SDLT).

Different SDLT rates apply to non-residential and residential properties, respectively. Furthermore there are higher rates due on residential properties if the purchase results in the purchaser owning more than one residential property. Non-resident purchasers will also face a 2% surcharge.

The maximum SDLT charge is 5% for non-residential property and 17% for residential property.

The good news is that there are a number of reliefs available to reduce the rate of SDLT, such as:

• If the property is mixed-use (for example, a farmhouse and an operating farm), the non-residential rates apply, with the maximum rate being 5%.
• multiple dwellings relief, allows for the rate of SDLT to be based on the average price per dwelling rather than the combined cost. Therefore lowering the effective rate of tax. This would apply when buying a property consisting of a number of apartments or may even apply to a house with a granny flat.
• If there is an overage on land, it may be permissible to delay payment of SDLT on the overage part. This can result in a cashflow benefit as well as interest computed from a later date on any overage.

The SDLT laws are very complex and due to the high rates of tax, claims for relief have become an area that HMRC look at in detail. It is therefore essential that you obtain expert advice.

The information detailed above is based on the legislation at the time of publication. The government conducted a consultation on the mixed-use regime and multiple residences alleviation provisions, which concluded in February 2022. It remains to be seen if this will result in changes to the rules.

If you would like to discuss SDLT in more depth, get in touch with JW Hinks on 0121 456 0190. Our professional team of tax experts have significant experience in the area of SDLT, and can help you to ensure you are not paying more than you have to when you purchase property.