Am I Eligible for a Stamp Duty Reduction or Exemption?

The new stamp duty rates from 1st July 2021

From 1st July 2021 to 30th September 2021, the stamp duty rates for the purchase of the main residence have increased but are still lower than normal rates, as follows:

• Up to £250,000: 0%
• From £250,001 to £925,000: 5%
• From £925,001 to £1.5 million: 10%
• From £1.5+ million: 12%

Remember, only the portion of the value of the sale within each band is payable, hence if the sale is for £750,000, the first £250,000 will attract no stamp duty, and the next £500,000 will attract an SDLT of 5%.

From 1st October 2021, the standard SDLT rates below will apply:

• Up to £125,000: 0%
• Up to £125,001 to £250,000: 2%
• From £250,001 to £925,000: 5%
• From £925,001 to £1.5 million: 10%
• From £1.5+ million: 12%

The above rates apply to England and Northern Ireland.  The rates in Wales reverted to normal on 1st July 2021, and the rates in Scotland reverted to normal in April.

For more details on the temporary and normal SDLT rates, including for additional properties, see the government website here.

Who else is eligible for an SDLT relief or exemption?

Beyond the SDLT exemptions and relief outlined above, some buyers are also eligible for other forms of relief, including:

• first-time buyers (for purchases up to £500k, no SDLT is payable on the first £300,000 and only 5% for the portion up to £500,000).
• first-time buyers of shared ownership properties
• multiple dwellings
• building companies buying an individual’s home
• employers buying an employee’s house
• local authorities making compulsory purchases
• property developers providing amenities to communities
• companies transferring property to another company
• charities buying for charitable purposes
• right to buy properties
• registered social landlords
• Crown employees
• for purchases related to freeport tax sites

To see the various rates of SDLT relief available in these circumstances, see the government website guidance.

In addition, exemptions from paying any SDLT are available for a range of property transactions, including where:

• land or property changes hand at no cost (e.g. the land or property is gifted) 
• property is left in a will – this exemption applies even if debt is still remaining on the property.
• the ownership of a property is transferred following a divorce or the dissolution of a civil partnership – for this exemption to apply, the parties must either formally agree to split their property and land between themselves or split the property by use of a court order.

There are another set of exemptions that apply; in these cases, not only is no SDLT payable, the purchaser does not need to inform HMRC of the transaction, these include where:

• a freehold property is purchased for less than £40,000
• a new or assigned lease of seven years or more is purchased – note: this only applies if the premium is less than £40,000 and the annual rent is less than £1,000
• a new or assigned lease of less than seven years is purchased – note: this only applies if the amount paid is less than the residential threshold or non-residential threshold of SDLT
• alternative property financial arrangements are used – the government provides the example of transactions that need to comply with Sharia law

If there is no formal need to inform HMRC of a property transaction where SDLT is not due, it is still recommended that you keep records that prove that the exemption applies in your case.  If you are in any way unsure if you are eligible for an exemption, it is always recommended that you check with a property law Solicitor or conveyancer who will be able to clarify this.  It is important to avoid a situation whereby you believe you do need to pay SDLT or inform HMRC only for them to demand payment and penalties at a later date.  

Wrapping up

Calculating SDLT can become rather convoluted in certain circumstances, especially for linked transactions, additional properties, non-UK residents, multiple dwellings, transactions involving trusts, transactions involving companies, and when claiming refunds.  Given the large sums of money at stake, it is always advisable to check the amount you will be required to pay and to verify that you are eligible for SDLT relief or exemption.

Guillaumes LLP Solicitors is a full-service law firm based in Weybridge, Surrey.  We have a highly experienced property law team who can assist you with all matters relating to stamp duty relief and exemptions.  To make an appointment, please call us on 01932 840 111.