Stamp Duty Land Tax (SDLT): Everything You Need to Know!

by | Jun 23, 2017

Stamp Duty Land Tax (SDLT): Everything You Need to Know!

The current Stamp Duty Land Tax (SDLT) threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. But are you aware that you may be paying too much in stamp duty land tax?

Buying a property can be more than a hard-work than you can imagine. You should be informed in every aspect of your payment; especially on taxes. Whether you are buying a property to land here’s everything you need to know about Stamp Duty Land Tax (SDLT):

What is Stamp Duty Land Tax?

colorful residential houses in United Kingdom

UK Government imposed a tax on the purchase of land and properties with values over a certain threshold which is known as the Stamp Duty Land tax (SDLT).

You pay Stamp Duty Land Tax  if you buy a property or land over a certain price in England, Wales and Northern Ireland. If you live in Scotland, SDLT no longer applies. Instead, you’ll pay Land and Buildings Transaction Tax when you buy a property.

You pay the tax when you:

  • Buy a freehold property
  • Buy a new or existing leasehold
  • Buy a property through a shared ownership scheme
  • Are transferred land or property in exchange for payment, e.g. you take on a mortgage or buy a share in a house

How Much is Stamp Duty Land Tax?

How much you pay depends on whether the land or property is:

  • Residential
  • Non-residential or mixed-use

You can use HM Revenue and Customs’ (HMRC) Stamp Duty Land Tax calculator to work out how much tax you’ll pay.

You may be able to reduce the amount of tax you pay by claiming relief, e.g. if you buy more than one property (‘multiple dwellings’).

The Value You Pay SDLT On (The ‘Consideration’)

The total value you pay Stamp Duty Land Tax on (sometimes called the ‘consideration’) is usually the price you pay for the property or land.

Sometimes it might include another type of payment like:

  • goods
  • works or services
  • release from a debt
  • transfer of a debt, including the value of any outstanding mortgage

Find out how to work out the consideration if your situation is complicated.

How and When to pay SDLT?

You must send an Stamp Duty Land Tax return to HMRC and pay the tax within 30 days of completion. 

If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees. If they don’t do this for you, you can file a return and pay the tax yourself.

There are certain situations where you don’t need to send a return. Read more about exemptions and reliefs.

Incorrect Stamp Duty Land Tax Payments

man frustrated in from of his computer

Due to confusion surrounding Stamp Duty Land Tax, HMRC have realised that Stamp Duty payments received are increasingly incorrect and have opened a department to handle refund claims.

GrowFactor has therefore added an exclusive service to all our current clients and to our Property Accountant Package  to offer the opportunity to ensure that you are not over paying and to claim a refund, where appropriate. To discuss this further, please contact your dedicated associate or book a free consultation to discuss.

Why could the Stamp Duty Paid be Incorrect?

Property transaction tax is not simple, as it not only involves the price paid but also the property’s current, past and future usage, ownership history, seller’s position, buyer’s position, geographical location and liabilities.

Increasingly, this tax calculation is done in house without tax advice.

Specialists have stated that up to 40% of property transactions may have led to the wrong Stamp Duty being paid.

How can a ‘Refund’ be requested?

It can be done using a specialist to forensically review past property tax transactions to ensure that the correct stamp duty tax has been paid and advise if a reclaim is available.

Is everyone eligible for the refund?

If any entity has paid an incorrect amount to the revenue, then you have the right to ask for it back.

This can be an individual, partnership, LLP, Limited Company, or PLC.

Why Do I Need a Specialist?

To reclaim an overpayment, it must be proven that the rate of duty paid was wrong and why.

To prove this, you need a deep understanding of property tax and reliefs available, along with case and tax law. Most lawyers have a brief understanding but the specialist we work with lectures on this subject to lawyers. He also reviews and plans both UK and non-UK property owner property tax strategies.

Is SDLT a Scheme?

No, as a scheme is normally defined as a method to reduce tax payable. Whereas, this duty has already been paid. We’ll help you reclaim an overpayment that has already been paid.

Is any Property eligible for SDLT?

Any type of building is eligible including residential, BTL or commercial.

The only criteria are that the building cost more than £500,000 and was purchased within the last 4 years.

Recent Stamp Duty Tax Reclaim Successes

Here are examples of recent success stories:

explaining using tablet

Residential Property

Mr K purchased a property for £2.8m in March 2014 paying £197,750 stamp duty. Our expert reviewed the transaction and refiled as the property consisted of mixed use. HMRC agreed with the filing and have issued a £84,000 refund.

Industrial Estate

Mr H is a partner in an LLP, he was advised and had paid full duty on a £1m + purchase of an industrial estate. Upon investigation by our Stamp Duty Land Tax expert, a clear link was established between the seller and purchaser, as they were related even though the seller was a limited company and the buyer an LLP. We then refiled with HMRC who have agreed and issued a refund of £42,000

Company Purchase

A property being acquired by a Company was ‘advised’ that 15% rate applied, tax of £126,000.  Investigations into property and its use revealed that it was used in a trade and was a mixed use. Refiling of the claim has resulted in a reduction of £94,000

Residential Development

A PLC brought a development for £1.7m, paying duty of £82,000. Investigation confirmed that the development was multiple dwellings not one. Refiled with HMRC who have agreed to refund £62,000

If you’d like to discuss this with GrowFactor, we’d like to offer you a free consultation. Please book in below.

Get FREE TAX Review

How can we help?

We work with amazing businesses across the UK and beyond.

Give us a call to speak to us now, or request a call back or fill out our form and a member of our friendly team will get back to you within 24 hours.

GrowFactor London:

Office Address: Aldwych House, 71-91 Aldwych, London WC2B 4HN, United Kingdom
Telephone: +44 20 7183 7288
Email: hello@growfactor.com

GrowFactor Birmingham:

Office Address: Grosvenor House, 11 St Paul’s Square, Birmingham B3 1RB, United Kingdom
Telephone: +44 121 227 1969
Email: hello@growfactor.com


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