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Stamp Duties

Stamp duties are charged on transfers of shares, land and interests in partnerships.

Situations where stamp duty is not chargeable include:

  • Where the consideration is less than £1,000
  • Transactions carried out orally
  • Gilt-edged securities

Shares

The rate of stamp duty/stamp duty reserve tax on transfers of shares and securities is 0.5%.

Land

Stamp Duty Land Tax (SDLT)

Residential properties

Under recent new rules, SDLT on the transfer of residential property in England, Wales and Northern Ireland is charged at each rate on the portion of the purchase price which falls within each rate band.

In Autumn Statement 2015, the government announced a Five Point Plan for housing, one of the points being the introduction of higher rates of SDLT on purchase of additional residential properties, such as buy-to-let properties and second homes.

The higher rates will apply only to additional residential properties purchased in England, Wales and Northern Ireland on or after 1 April 2016. The higher rates will be 3 percentage points above the current SDLT residential rates. They will be charged on the portion of the value falling within each band, like income tax.

The higher rates will not apply if at the end of the day of the transaction an individual owns only one residential property, irrespective of the intended use of the property. See below for examples

On the transfer of residential property, the SDLT is:

Tax Band Rate (%)
Main Residence Additional Residence
Value up to £40,000 0 *0
Over 40,000 to £125,000 0 3
Over 125,000 to £250,000 2 5
Over £250,000 to £925,000 5 8
Over £925,000 to £1.5 million 10 13
Over £1.5 million 12 15

Example 1:

An additional residential property is purchased for £200,000.
SDLT is calculated as follows:

3% on the first £125,000 =     £3,750
5% on the remaining £75,000 (the portion between £125,000 and £200,000)  = £3,750
The total SDLT due is therefore: £3,750 + £3,750 =   £7,500

Example 2:

Y is purchasing his first property. At the end of the day of the transaction he owns one property, so he will not pay the higher rates of SDLT. This is regardless of whether Y intends to use it as a main residence or, for example, a rental property.

Example 3:

Z already owns a main residence and is purchasing a property that will be used as a buy-to-let. At the end of the day of the transaction she owns two properties and has not replaced her main residence, so the higher rates will apply.

Non-residential properties

The way stamp duty on freehold commercial property and leasehold premium transactions is calculated has changed. Previously, these rates applied to the whole transaction value. From 17 March 2016 the rates apply to the value of the property over each tax band, as follows:

Property value band (£) Rate (%)
0 - 150,000 0
150,001 - 250,000 2
Over 250,000 5

This brings the method of calculation into line with the treatment of SDLT on residential properties.

New rates for leasehold rent transactions                        

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

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