Updates to stamp duty land tax

Following the spring budget earlier this year, there have been changes to stamp duty land tax. With a new government having since been elected, there could be more updates on the horizon.

Stamp duty land tax (SDLT) is payable on both residential and commercial properties, however the thresholds and rates involved are different.

The threshold for paying SDLT on commercial property is £150,000. SDLT is then charged at 2% up to £250,000, and anything above £250,000 the rate of SDLT is 5%.

The threshold for paying SDLT on residential property is £250,000. SDLT is then charged at 5% up to £925,000, and 10% up to £1,500,000. Anything above this is charged at 12%.

There are also various reliefs available, including charities, groups and multiple dwellings. There are additional charges for residential property if it results in more than two properties being owned, if the buyer is not a UK resident or is a company.

Recent updates to SDLT

In one of his last acts as chancellor, Jeremy Hunt announced in his spring budget that multiple dwellings relief (MDR) for SDLT was to be abolished. This came into effect on 1 June.

Introduced in 2011, MDR was a partial relief against SDLT for those purchasing two or more residential properties in a single transaction. This meant tax was payable on the purchase price divided by the number of dwellings, thereby accessing a lower band of tax and not the cumulative total of the purchase price.

The previous government didn’t believe that MDR had supported residential investment, eventually leading to its abolition. In any transaction where contracts were exchanged prior to 6 March 2024, however, the purchaser will still benefit from MDR even if the transaction completes after 1 June 2024.

Purchasers of six or more dwellings will still be able to apply non-residential rates to their SDLT, meaning the rate will be capped at 5%.

Following July’s general election result, we will await any updates from the new government (if any) to SDLT and its reliefs. If you have any questions or queries, get in touch with our highly rated real estate experts.

Acting for local, national and global clients, our Legal 500 and Chambers-rated real estate team has outstanding technical expertise to advise on a huge range of property transactions and non-contentious construction issues.

Note: Willans LLP do not give tax advice but can submit SDLT returns on behalf of clients.