Stamp Duty Land Tax (SDLT) is a tax levied on property purchases in the United Kingdom. The tax is payable by the buyer and is based primarily on the purchase price of the property. The amount of SDLT a buyer must pay depends on several factors, such as the purchase price of the property, whether the buyer is a first-time buyer, and whether the property is being purchased as a primary residence or as an investment. In this article, we will explore the cost of SDLT and how you can split it.

 

How is SDLT calculated?

 

SDLT is calculated as a percentage of the purchase price of the property. The percentage rate that applies depends on the value of the property. Currently, the following rates apply all across the UK:

 

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

 

The SDLT you pay as a buyer is not simply just a percentage of the price of the property, as this would mean buyers of expensive homes in the same bracket would end up paying less tax! For example, if you as a buyer were purchasing a property at the value of £300,000, you would pay SDLT of £5,000, which is calculated as follows:

 

  • 0% on the first £125,000 = 0%
  • 2% on the next £125,000 = £2,500
  • 5% on the remaining £50,000 = £2,500
  • Total SDLT payable = £5,000

 

Who Pays SDLT?

 

SDLT is payable by the buyer of the property. It is important to note that SDLT is only payable on properties that are purchased for more than £125,000, and if the property is purchased for £125,000 or less, no SDLT is payable.

 

How Can SDLT Be Split?

 

In most cases, SDLT is paid by the buyer of the property, but there are some situations where the cost of SDLT can be split between the buyer and the seller. 

For example, if the buyer and seller agree to a lower purchase price for the property in order to reduce the SDLT liability, the cost of SDLT can be split between them. In this scenario, the buyer would still pay SDLT based on the actual purchase price of the property, but the seller would pay the difference between the actual SDLT liability and the amount that would have been payable if the purchase price had not been reduced.

 

Another scenario where the cost of SDLT can be split is when the property is being sold as part of a divorce settlement, and the SDLT would simply be split between the parties involved in the divorce.

 

It is also possible that the buyer and seller may agree to split the cost of SDLT in any other way they see fit. However, it is important to note that any agreement to split the cost of SDLT must be documented in the sale contract to avoid any legal issues.

 

Are There Any Exemptions to SDLT?

 

There are some situations where SDLT is not payable, the most common being if the property is being purchased by a first-time buyer for £300,000 or less. As a first time buyer, you are not expected to pay stamp duty tax unless the property cost you £300,001 or more. 

 

There are also exemptions for certain types of property transactions. For example, if the property is being transferred as a gift or as part of an inheritance, no SDLT is payable. Similarly, if the property is being transferred as part of a divorce settlement, neither party is expected to pay stamp duty tax.

 

If you believe you’ve unnecessarily paid SDLT, please do not hesitate to contact us today and find out if you’re eligible for a refund claim.