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 September 2022, first-time buyers are exempt from paying Stamp Duty Land Tax on properties up to £425,000.

ELIGIBILITY

Do you qualify for Stamp Duty Land Tax Exemption?

There are many circumstances where you may be eligible for Stamp Duty Land Tax Exemptions. Listed below are the various situations where exemptions apply:

  • 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.

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. stamp duty 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 stamp duty exemption under certain conditions. These will mostly depend on the employee’s living situation.

The purchase will only have a stamp duty exemption 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 has a right to stamp duty exemption 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.

GUIDANCE FOR FIRST-TIME BUYERS

First-Time Buyer Stamp Duty Exemption and Rules

Even if you qualify as a first-time buyer, and you want to purchase two or more homes you will not qualify for the relief.

In terms of spouses and relationships, the relief will not be available if you are a first-time buyer and your spouse isn’t. Both of you should be first-time buyers and each of you should have not previously owned a dwelling of any kind.

The property should be acquired for residential use, and should not be intended for commercial purposes, so if you are interested in purchasing a commercial property, first-time buyer relief will not apply to you.

When purchasing a residential property ensure that the person you are buying with plans to live there too. If anyone you are purchasing the property with will mark the property as their main residence, you will not qualify for first-time buyer relief.

Also, be aware that the relevant considerations for first-time buyer relief are no more than £625,000.

CONSULT WITH CAPEX

Tax laws and regulations can be complex and subject to change, so it’s advisable to seek guidance from qualified tax professionals such as CapEx Tax Specialists who can provide specialised advice based on your situation.

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STAMP DUTY EXEMPTION FAQs

In most scenarios, no, you would have to apply in order to achieve the exemption, however some cases could be automatically applied under certain circumstances.

For example, if you were a first time home buyer, then the first time buyer exemption would then automatically apply and you would not have to pay Stamp Duty.

Stamp duty land tax can be subject to certain conditions, for example, if you qualify for the first time buyer exemption, apply for this and have it granted but then decide to sell your property swiftly after, then you may have to pay back the exemption amount that was applied to your original stamp duty bill.

No, Jurisdictions can be different depending on where you are situated, which makes it vital for you to understand the specific regulations and guidelines that apply to you within your relevant jurisdiction.

ANY QUESTIONS? CONTACT US

With over 25 years of experience, we have helped clients big and small to claim government money through funding, SDLT reclaims and relief.


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