Chapter One – Introduction

SDLT was introduced in 2003, replacing Stamp Duty for land transactions. For many of the years that followed, the standard ‘slab system’ applied with the only concerns for those calculating the SDLT charge being the value and nature of the property.

However, over the years HMRC has introduced a raft of new legislation.

A brief history of SDLT
1 December 2003	SDLT introduced in respect of land transactions
6 December 2006	S75A FA 2003 was introduced (SDLT general anti-avoidance provision) to enable HMRC to combat tax avoidance schemes using legislation instead of litigation (as previously was the case)
19 July 2011	Multiple Dwellings Relief introduced
21 March 2012	15% rate introduced for high value transactions by non-natural persons (threshold £2,000,000)
20 March 2014	15% rate: threshold reduced to £500,000
4 December 2014	‘Slice1’ basis of taxation replaced ‘slab2’ basis for residential property
1 April 2015	Tax raising powers devolved to Scotland: Land and Building Transaction Tax introduced
17 March 2016	‘Slice’ basis of taxation replaced ‘slab’ basis for non-residential property
1 April 2016	3% higher rates for additional dwellings and dwellings purchased by companies introduced
22 November 2017	Relief for first-time buyers introduced
1 April 2018	Tax raising powers devolved to Wales: Land Transaction Tax introduced
8 July 2020 – 31 March 2021	Temporary increase to SDLT Nil rate and 3% band for residential properties following the coronavirus (Covid-19) pandemic.
1 April 2021	Proposed introduction of a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland.

The SDLT statute book is now more complex than ever. Accordingly, it is becoming increasingly difficult to remain compliant with the ever-changing rules.

The SDLT charging provisions are contained in Part 4 of Finance Act 2003 (S42 – 124 and Schedules 2A – 19) and as hinted above, are rather complex. However, it is important to take a systematic approach when working through the legislation to ensure its correct application in respect of a specific land transaction. The legislation should be the primary focus.

Case law can be referred to, to assist with the application of the rules.

HMRC’s internal guidance manual can be helpful, but it is important to stress that this guidance is HMRC’s view of the interpretation of the legislation and not the actual legislation. In some cases, this can give rise to discrepancies and therefore should not be solely relied upon without confirming the legislative basis.

 

SDLT Rates

The rates at which SDLT is charged is dependent on the nature of the property and type of transaction.

Table A – Entirely Residential Property Transactions

Relevant Consideration	Standard Rate	Higher Rate for Additional Dwellings
Up to £125,000	0%	3%
£125,001 – £250,000	2%	5%
£250,001 – £925,000	5%	8%
£925,001 – £1,500,000	10%	13%
£1,500,001 +	12%	15%

 

First Time Buyers – Entirely Residential Property Transactions

Relevant Consideration	Rate
Up to £300,000	0%
£300,000 – £500,000	5%
Over £500,000	Standard SDLT rates apply to whole purchase price

 

Higher Rate for Acquisitions of Residential Property by Certain Non-Natural Persons

Relevant Consideration	Rate
Individual dwelling over £500,000	15%

 

Residential Leases

Premiums paid for the grant or assignment of a lease are taxed in accordance with Table A (entirely residential) in the normal way.

NPV of rents	Rate
Up to £125,000	0%
£125,001 +	1%

Temporary increase to SDLT Nil rate and 3% band for residential properties following the coronavirus (Covid-19) pandemic

The Nil rate and 3% rate threshold are increased for residential properties purchased from 8 July 2020 until 31 March 2021 (temporary relief period).

Table A – Entirely Residential Property Transactions

Relevant Consideration	Standard Rate	Higher Rate for Additional Dwellings
Up to £500,000	0%	3%
£500,001 – £925,000	5%	8%
£925,001 – £1,500,000	10%	13%
£1,500,001 +	12%	15%

 

Relief for First-Time Buyers

The provisions applicable to first time buyers in section 57B and Schedule 6ZA will be disapplied during the temporary relief period.

Residential Leases

Premiums paid for the grant or assignment of a lease are taxed in accordance with Table A (entirely residential) in the normal way.

NPV of rents	Rate
Up to £500,000	0%
£500,001 +	1%

Table B – Non-Residential & Mixed-Use Property Transactions

Relevant consideration	SDLT rate
Up to £150,000	0%
£150,001 – £250,000	2%
£250,001 +	5%

Non-Residential Leases

Premiums paid for the grant or assignment of a lease are taxed in accordance with Table B (non-residential) in the normal way.

Relevant consideration	SDLT rate
Up to £150,000	0%
£150,001 – £5,000,000	1%
£5,000,000 +	2%

 

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