STAMP DUTY LAND TAX EXEMPTIONS

Stamp Duty Land Tax (SDLT) is charged on property transactions in the UK when their value is above a set threshold. Depending on the nature of these transactions, there are some cases when the buyer will qualify for SDLT relief or Stamp Duty exemptions. The rules on SDLT are subject to annual reviews and have continued to change over the last few years. Therefore, consulting a professional for SDLT exemptions and reliefs is paramount, even for the most straightforward property purchases.

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SDLT EXEMPTIONS

As of November 2017, first-time buyers are exempt from paying Stamp Duty Land Tax on properties up to £300,000.

ELIGIBILITY

Can you Qualify?

  • There are no money or other payment exchanges during the property transfer. In these circumstances, you also don’t need to file an SDLT return.
  • You are named as a property owner in someone’s will. This includes properties with outstanding debts, like mortgages.
  • The property is transferred or split because of divorce or dissolution of a civil partnership
  • The transaction is for a freehold property with a purchase price of less than £40,000
  • When you buy an assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
  • When you buy a new or assigned lease of fewer than 7 years, but the amount you pay is less than the residential or non-residential SDLT threshold
  • When alternative property financial arrangements have been put in practice (e.g. to comply with Sharia law)

Exemptions Explained

Stamp Duty Land Tax (SDLT) is charged at 15% on residential properties costing more than £500,000 bought by companies and corporate organisations.

In certain cases, the 15% charge may not apply. This applies to properties bought by a company acting as a trustee of a settlement. SDLT exemptions are also valid if a company buys a property to use it for one of the following reasons:

  • When the property will be used for property rental business
  • When the property is used for developers and traders
  • If the property is made available to members of the public
  • When financial institutions are acquiring property in the course of lending
  • When the property is occupied by employees
  • For farmhouses
Sometimes, an employer may wish to buy an employee’s home. In this case, the employer or property trader will be eligible for a SDLT exemption under certain conditions. These will mostly depend on the employee’s living situation. The purchase will only be exempt from Stamp Duty Land Tax if the employee had to relocate for their job.
When a building company buys a home from someone who, in turn, is buying a new home from them, the property bought by the company is exempt from SDLT if certain conditions are met. These include specifications around the area size of the property and the living arrangements of the individual who is selling the property.