Stamp Duty Land Tax - Old Mill helpsheet for Estate Agents and Solicitors
Stamp Duty Land Tax (SDLT) - a complex tax
SDLT may appear to be straightforward but in reality, it is one of the most complex areas of taxation with a number of potential pitfalls. Old Mill has a specialist SDLT team that have experience in navigating clients and their advisers through this complex area.
SDLT is a significant cost of any property purchase but there are reliefs available that can make substantial savings on the amount of SDLT payable.
When dealing with clients purchasing property, queries on SDLT will inevitably arise and can be difficult to answer. In order to assist you, we have produced this helpsheet so you can give your clients some pointers and refer any more complex queries to us.
Next steps - contact Old Mill SDLT advisory team
It is important that the correct SDLT is paid and that the SDLT return is correctly completed.
Where it’s thought that any of the above situations apply advice can be obtained from our specialist SDLT team. Initial enquiries should be made to:
Laura Wylie
laura.wylie@om.uk
Tel: 01225 701244
Stamp Duty Land Tax (SDLT) - potentially complex areas
1. Mixture of residential and non-residential e.g. dwelling and commercial building included in the same transaction: Non-residential SDLT rates may be applicable, which will reduce the SDLT liability. Care must be taken as there has been much case law on mixed-use transactions, the majority of which have decided in HMRC’s favour.
2. Purchase includes an annexe/subsidiary dwelling: With Multiple Dwellings Relief having been abolished in May 2024, it remains important to consider the value of any subsidiary dwelling included in a transaction as this could inadvertently trigger the 5% additional dwelling surcharge where it would otherwise not be due.
3. Non -UK resident purchasers: Higher rates of SDLT may apply but refunds may be available depending on the future residence status of the purchasers.
4. Purchasers who own other residential property anywhere in the world: Higher rates of SDLT may apply but SDLT may be refundable at a later date if conditions are satisfied. The higher rate is (since 31 October 2024) a 5% surcharge added to each of the ordinary residential SDLT rates. For contracts that exchanged on or before 30 October 2024, the surcharge is at the old rate of 3%.
5. Non-natural person (NNP)/company buying residential property: Higher SDLT rates will apply in most scenarios and there may also be an Annual Tax on Enveloped Dwelling (ATED) charge if the value of the dwelling is more than £500,000.
6. Dwelling being purchased is in a dilapidated state of repair: The non-residential SDLT rates may apply if the property is uninhabitable.
7. Purchase of a leasehold property, either residential or commercial: Complex rules exist for SDLT on leases that should be considered at the outset. For example: Is it part of a sale and leaseback transaction? Is the lease for a fixed or indefinite term?
8. Trustees of a trust buying the property: Sometimes it is the beneficiary’s status that determines the SDLT liability for the trustees.
9. Partnership buying a property: Complex rules surround a partnership buying residential property and there are many points to be considered.
10. Is the reason for the purchase due to a divorce? Dependant on the situation, SDLT could be payable at the standard or higher SDLT rates, or the transaction may benefit from an exemption.
11. Does the purchaser own other residential property they have inherited? SDLT rules in this situation need to be considered as the higher rates of SDLT could apply depending on when and how the property was passed to the beneficiary.
