Relief from Stamp Duty

11/07/2011

ARE YOU ENTITLED TO RELIEF FROM PAYMENT OF STAMP DUTY LAND TAX?

Stamp Duty Land Tax is payable on property transactions in the United Kingdom where the value exceeds certain thresholds.  The current thresholds for Stamp Duty Land Tax on residential properties are: –

Purchase Price/lease premium/transfer value                                           Rate

Up to £125,000.00                                                                                              Zero

Over £125,000.00 to £250,000.00                                                                 1%

Over £250,000.00 to £500,000.00                                                                3%

Over £500,000.00 to £1 million                                                                        4%

Over £1 million                                                                                                            5%

Some transactions will qualify from reliefs that can reduce the amount of Stamp Duty Land Tax payable or result in no Stamp Duty Land Tax being due.

Relief for first-time buyers:

The most commonly known relief is perhaps the SDLT relief for first-time buyers.  In order for this relief to apply: –

  • The completion date must be before 25 March 2012
  • The consideration given must £250,000.00 or less
  • The buyer must intend to live in the residential property and that it will be their only home
  • The buyer must not have previously owned property or land anywhere in the world.

It is therefore important that any buyers wishing to take advantage of this relief purchase a property for the proposed end date of 25 March 2012.

Some reliefs that are perhaps less well known are: –

Disadvantaged Areas relief:

This will usually apply to residential properties located in areas that are designated by the Government as ‘disadvantaged’.

Many people do not know that Disadvantaged Areas Relief is available in almost 2000 areas within the UK.  It is possible to carry out a postcode check to ascertain whether a property will benefit from Disadvantaged Areas Relief.

Relief where an employer buys an employee’s home when they are relocating:

In some cases it may be possible for the employer in this situation to benefit from relief if conditions are met such as: –

  • The employer’s purchase of the employee’s home is as a result of the employee having to move due to their job relocation
  • The employee lived in the house as their main or only residence for a period of time during the 2 years before the sale to their employer
  • The price is a true market value of the property
  • The size of the property is within H M Revenue and Customs’ restrictions

At a minimum, all these conditions will need to be met if relief is to apply.

Relief for Charities:

Subject to certain conditions, charities can obtain relief from Stamp Duty Land Tax when they buy property or land for charitable purposes.

Relief for right to buy properties:

A right to buy transaction most commonly occurs where there is a sale of a property at a discount by a Local Housing Authority.  In these cases, Stamp Duty Land Tax will usually be calculated on the discounted price paid by the purchaser.

The H M Revenue and Customs website provides further guidance as to the reliefs available.

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