Tax on Property’s Purchase in the UK
If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings.
What is Stamp Duty Land Tax?
SDLT replaced Stamp Duty in December 2003 and is a tax on the purchase price of land and buildings. When you buy a property you may have to pay SDLT.
Paying SDLT
New thresholds introduced from 3 September 2008 mean that if you buy property where the purchase price is £175,000 or less you don’t pay any SDLT at all.
If it’s more than £175,000, you pay between one and four per cent of the whole purchase price. The previous starting rate threshold for SDLT was £125,000.
| Purchase price of residential property | Rate of SDLT (percentage of the total purchase price) |
|---|---|
| £0 – £175,000 (until 31 December 2009 inclusive) | 0% |
| £175,001 – £250,000 | 1% |
| £250,001 – £500,000 | 3% |
| £500,001 or more | 4% |
You can check current rates of SDLT on the HM Revenue & Customs (HMRC) website.
SDLT Disadvantaged Areas Relief
Disadvantaged Areas Relief (whereby properties bought in areas designated by the government as ‘disadvantaged’ had a higher SDLT threshold than other properties) will not apply for property purchases between 3 September 2008 and 31 December 2009 inclusive.
Instead the SDLT threshold will be the same as for all other residential property as shown above. The new threshold is higher than the previous Disadvantaged Areas Relief threshold of £150,000.
Zero carbon homes
A zero-carbon home must be ‘zero carbon’ over the course of the year. The house can be connected to mains electricity and gas but needs to have sufficient additional renewable power to cover the average consumption of a house over a year.
In order to achieve this, the fabric of the building will have to be insulated and built to very high standards and the house will need to incorporate renewable energy technologies.
The 2007 Budget announced that relief from SDLT for zero-carbon homes would be introduced from 1 October 2007. All qualifying houses under £500,000 will be exempt and houses over £500,000 will have their SDLT bill reduced by £15,000.
Paperwork
As the buyer of the property, you are responsible for completing the land transaction return and paying the SDLT.
However, in practice, your solicitor or licensed conveyancer will usually handle this for you and send it to HMRC on your behalf.
You should check that all the information on the form is correct and complete before signing the declaration.
