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Stamp Duty Land Tax – who pays it?

When buying a residential property, many costs are involved. In addition to the actual cost of the property, there are other add-on costs including surveyor and legal fees and Stamp Duty Land Tax (SDLT), commonly referred to as “stamp duty”.

However, there may be reliefs and exceptions in certain cases. Here, Elizabeth Jennings, Mander Hadley’s Head of Residential Conveyancing explains who is exempt from paying stamp duty:

Who pays stamp duty?

If you live in England or Northern Ireland, as of 23 September 2022 you no longer pay SDLT on the first £250,000 of a property’s value. Separate arrangements apply in Wales and Scotland.

For first-time buyers, there is no SDLT on the first £425,000 of the value of properties valued at less than £625,000.

It is the duty of the home buyer to pay the SDLT and not the seller. This is normally paid by your solicitor on your behalf as part of the purchase process.

What are the reliefs and exemptions from SDLT?

HM Revenue & Customs (HMRC) stipulates that an SDLT return must be completed, even if no tax is due, for:

  • First-time buyers, up to a certain limit
  • Charities buying for charitable purposes
  • Registered social landlords
  • Local authorities making compulsory purchases
  • Right to buy properties
  • Multiple dwellings
  • Building companies buying an individual’s home
  • Employers buying an employee’s house
  • Property developers providing amenities to communities
  • Companies transferring property to another company
  • Crown employees.

The tax authority says you do not have to pay SDLT or file a return if:

  • You buy a freehold property for less than £40,000
  • Transferral of the property is because of divorce or dissolution of a civil partnership
  • The property is left in a will
  • You buy a new or assigned lease of seven years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
  • You use alternative property financial arrangements, for example to comply with Sharia law.

It is advisable to seek professional advice when dealing with stamp duty issues to ensure that you do not fall foul of HMRC’s complicated rules.

For more information on stamp duty and the various reliefs and exemptions that are available, please get in touch with our expert team.

Elizabeth Jennings

Director - Commercial Property & Charities

I joined Mander Hadley in 2004, qualified as a solicitor in 2006 and have focussed on commercial law throughout. I am also a member of Coventry and Warwickshire First and Warwickshire Law Society.