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Do you have to pay stamp duty on land?

Stamp Duty Land Tax (SDLT), commonly referred to as Stamp Duty, is a tax payable on certain property and land transactions over £125,000 for residential properties in England and Northern Ireland. If you purchase a property above the threshold in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales, you pay Land Transaction Tax (LTT) instead of SDLT.

When paying tax on land, it can be labelled as stamp duty because this will make it easier for banks and building societies to state that tax is universal on land and property transfers.

The cost of the SDLT rate on the land purchase ultimately depends on the pricing of the land itself, anything above £150,001 will require you to pay 2% stamp duty.

Anything over 250,000, will require a 5% stamp duty payment.

What are SDLT rates?

There are several rate bands for Stamp Duty. 

The updated rates of Stamp Duty for a single property in 2023 are as follows:

For example, in December 2022, if you purchased a property for £295,000, the SDLT you will owe will be 0% on the first £250,000, then 5% on the final £45,000. Which would then equal out at £2,250.

Note that the amount of stamp duty that needs to be paid only applies to the part of the property price falling into each band.

Do you pay SDLT on a commercial property?

Yes. The current SDLT threshold for non-residential land and properties is £150,000. The same rates above apply to how much SDLT you have to pay.

Calculating SDLT on commercial properties can be complex, in some cases leading to overpayment. The stamp duty refund process with commercial properties can be time-consuming and complex, which is why our specialists at CapEx Tax can effectively complete all necessary steps to solve all issues that come up in the refund process.

Stamp duty for second homes

If you are purchasing additional residential properties, including second homes and buy-to-let properties, you will have to pay an extra 3% Stamp Duty on top of the current rates tabled above for each band. The increased rate is added to properties bought for £40,000 or more and doesn’t apply to caravans, mobile homes or houseboats. If you’re buying a new main residence, but the sale of your previous main residence is delayed, you will have to pay the higher Stamp Duty tax rate because you’ll own two properties.

When do I have to pay stamp duty?

You must file your Stamp Duty Land Tax return within 14 days after the purchase and pay the SDLT due on the property. This was reduced from the previous 30-day deadline on 1st March 2019. Submitting your return after the 14 days, or not submitting it all, leaves you open to penalties and interest from HMRC.

If you have not paid back your fines or penalties within 12 months or more, then the penalty rate can increase if the failure to submit the documents was deliberate. There are some cases where the penalty or charge will be cancelled, examples of this may include:

There are also scenarios where a penalty will not be cancelled, for example:

Stamp Duty Relief For First-Time Buyers

A first-time buyer in England or Northern Ireland does not have to pay Stamp Duty on properties worth up to £425,000.

A first-time buyer is classified as a person purchasing their only or main residence and has never owned a freehold or has a leasehold interest in a residential place in the UK or abroad.

 If you purchase a property costing up to £500,000, you won’t pay Stamp Duty on the first £425,000. 

You will pay Stamp Duty on the remaining amount, up to £75,000. If you’re purchasing a property over £500,000, you must pay the standard SDLT and you don’t qualify for the first-time buyer’s relief.

Shared Ownership

Since October 2018, first-time buyers under Shared Ownership schemes are entitled to claim First-Time Buyers Stamp Duty relief on homes worth up to £500,000. The change applies to homes bought on or after 22 November 2017. If you paid your Stamp Duty in stages during this time and were previously ineligible for relief, this tax can be claimed back by completing an SDLT return. You must meet eligibility requirements. If you paid SDLT on the market value of the property, you can still claim tax relief.

Shared Ownership – Couples

If you’re married and you’re both first-time buyers, you can get first-time buyers Stamp Duty relief. Unmarried couples can also claim relief if the only person named on the mortgage is a first-time buyer. However, there are other elements that affect couples:

The maximum saving on buying your home is still £5,000 no matter how many names are on the mortgage.

If a couple splits up, and the property is in both names, both parties have a claim. If only one name is on the property, the other isn’t legally entitled to the relief.

When is stamp duty not payable?

You will avoid paying SDLT if you purchase a property for less than £125,000. There are other circumstances for Stamp Duty exemption, where it’s not payable or can be reduced:

If you do exchange properties with another person, you will each have to pay Stamp Duty on the property you receive based on the market value.

How to pay stamp duty

Stamp Duty returns are usually handled by your solicitor and payment is due for you, although you can do it by yourself. Either way, the person on the deed is responsible for submitting the tax return on time. Even if you’ve purchased a property under £250,000, you must still submit a tax return (unless exempt) even if you don’t have to pay Stamp Duty Land Tax.

You will be granted 14 days after the day you have purchased your residence to sign a return to HMRC and pay any stamp duty that is due.

Our specialists will guide and assist you in submitting your SDLT payment, we understand that tax laws and regulations can be confusing as they are ever-changing, save valuable time and seek our professional guidance.

Am I Eligible For A Stamp Duty Refund?

With a lack of understanding of all the legislation regarding SDLT, you could be entitled to a refund. Without a trained solicitor you may have been unaware of the relief you’re entitled to. There are certain cases where this is possible:

If you’ve paid Stamp Duty excess because you owned two homes concurrently, you are entitled to a refund if you’ve sold or given away your previous main residence within 3 years of buying the new one. You can apply for a stamp duty refund of the higher rate part of your Stamp Duty bill. You can request a refund for the amount above standard Stamp Duty rates if you sell your previous home within three years, and you can claim a refund in the first three months of the sale of your previous main home, or within 12 months of the filling in the date of your SDLT return – whichever comes later.

How to Apply For a Stamp Duty Refund?

If you are wondering how to apply for a stamp duty refund or how to claim stamp duty back then the first steps should include, thoroughly checking the eligibility criteria of your local jurisdiction in order to know if the process is worth completing.

All relevant documentation then must be collected, this could be documents such as proof of payment, evidence of first-time buyer relief, without documentation it will be increasingly difficult to process your application.

The correct authority should be contacted in order to assist you in the stamp duty refund process, whether this would be a local government agency or tax authority.

Completing the application form and ensuring that all your property, personal, and financial details are correct, this is essential as all of this information will be checked rigorously.

Remember to be patient with the waiting process, while your application is being processed and reviewed, then act accordingly once you have a response.

If your application is deemed unsuccessful, or you face other challenges in certain stages of this process, then CapEx Tax experts can guide you along the way and help you learn how to claim stamp duty back in the most successful way possible.

Who Can Help You With Your SDLT Refund?

The expert team at CapEx will look into your property purchase to see if you’ve overpaid on SDLT and if you can claim that money back. If you are due a refund, we will go through the process of reclaiming Stamp Duty via HMRC stamp duty refund application. All advice given to you is from a Chartered Tax Advisor, giving you peace of mind.

Our specialists will search and check to see if you are eligible for a stamp duty refund as well as prepare you with all the correct checks and documentation to go along with your HMRC stamp duty refund application process.

Communicating with HMRC is something we also take care of on your behalf and we can ask any queries or issues you may have with the refund process.

Record tracking is huge when it comes to submitting your SDLT refund as without certain documentation this process cannot be completed, our tax specialists at CapEx Tax will keep on top of all these records and ensure that all documents are maintained and stored safely.

Our experts can update you on the recent stamp duty changes and explain what actions need to be taken based on your circumstances.

Get in touch with us today for more information on putting together HMRC stamp duty refund application.