2021 Stamp Duty Land Tax Rates in the UK

2021 Stamp Duty Land Tax Rates in the UK

When you purchase a property in the UK a tax or duty is payable to HMRC. Known officially as stamp duty land tax (SDLT), this is a tax that was significantly changed from its predecessor, Stamp Duty. The UK government renamed and relaunched the tax in December 2003 and displayed the new rules and rates of SDLT on their website. On the face of things, it seems a simple and easy calculation followed by a painful payment process. You are probably unaware that there are a number of reliefs that can be claimed and can significantly reduce your stamp duty burden.  

2021 Stamp Duty Land Tax rates

2021 Stamp Duty Land Tax rates, valid until 30 June 2021 are:

Property or lease premium or transfer valueSDLT rate
Up to £500,000Zero
The next £425,000 (the portion from £500,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

These rates take account of the current Stamp Duty Holiday on purchases of property over £500,000, which is due to end at the end of June 2021. From July 2021 until the end of September 2021, the zero rate threshold will be set at £250,000 – double its standard level of £125,000 and will return to that level on October 1st, 2021.

From 1 October 2021 SDLT rates will revert to:

Property or lease premium or transfer valueSDLT rate
Up to £125,000Zero
The next £125,000 (the portion from £125,001 to £250,000)2%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

If you were to complete the purchase of a new primary residence with a price of £450,000 prior to 30 June, the SDLT would be nil. However, from 1 October it would revert to £12,500. Similarly, on a purchase price of £250,000, the SDLT will be nil, whereas, from 1 October, it will revert to £2,500.

You can easily see how the cost of SDLT increases quite steeply as the purchase price of your property goes up. Going even higher, if your purchase price is £750,000 the current SDLT will be £16,250 and from 1 October a whopping £27,500.

If your property is not your primary residence there is also a surcharge of an additional 3%. So, if you purchase a property as a holiday home or as a buy to let property this additional burden will apply to that purchase.

SDLT Reliefs

However, some of the reliefs referred to above may enable you to claim a reduction or refund in SDLT. Reliefs afforded include such things as granny flats on the property, commercial buildings on the plot, rights of way or wayleaves across the property when an exclusivity agreement and non-refundable deposit have been paid and even first-time buyer purchases. 

When all parties to a transaction are first-time buyers there is also a relief to claim which reduces the SDLT on that particular purchase. All property types are included by any purchaser for SDLT. This includes foreign buyers and for the sale of commercial properties, including sites acquired by developers.

Stamp Duty Land Tax reporting

Once the purchase transaction is complete an SDLT return must be lodged for all property transactions in excess of £40,000, whether any SDLT is payable or not. This return must be lodged within 14 days of completion. If you fail to lodge the return you will be liable to a penalty fine. So it is important that you remain on top of your situation when you buy a property for whatever reason, whether it be a freehold or leasehold purchase.

The types of relief available tend to lean toward larger properties and when a purchase has been made for more than £500,000 there is more likelihood that relief may be available. This does not preclude smaller and lower-priced properties entirely. If you already purchased a property in the UK, then learn more about SDLT refunds here.

In the next article, I shall evaluate some of the finer details regarding SDLT and offer some case studies. Meanwhile, if you have any questions about a transaction you may have made in the last year and sometimes for up to four years ago please do not hesitate to contact Soteria Trusts or view our dedicated SDLT Refund page, where you can also find a free guide to SDLT to download.

This article has been written by Andrew Wood.

Connect with him on LinkedIn: https://www.linkedin.com/in/andrewwoodbca

 

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