Filing Stamp Duty Land Tax

Upon purchasing a new property, the buyer is bound to pay additional expenses besides the purchase price. Along with legal costs and agent commission, the property owner might have to pay the Stamp Duty Land Tax (SDLT).

Stamp Duty Land Tax is the tax payable by the buyer on property transactions over specific prices in England and Northern Ireland. The purchaser is bound to pay the SDLT on buying residential properties or a piece of land costing over £250,000 (£425,000 for first-time buyers). Property buyers in Scotland and Wales will pay Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively.

Calculating Stamp Duty and Land Tax

There are tons of online tools allowing you to calculate SDLT, however, it is best to use the official ones established by the government bodies. Property buyers in England and Northern Ireland can calculate Stamp Duty and Land Tax by using HM Revenue and Customs.

To assist you in calculating the Stamp Duty and Land Tax, the standard SDLT rates for residential properties are as follows:

0%: £0 – £250,000
5%: £250,000 – £925,000
10%: £925,000 – £1,500,000
12%: £1,500,000+

Filing Stamp Duty Land Tax

The purchaser's solicitor or agent can log into the HM Revenue and Custom to file SDLT returns. The land transaction return should be filed on the purchaser's behalf even if they are not required to pay the tax.

Usually, the purchaser's solicitor deals with SDLT returns and payment of tax, making sure it is submitted on time to avoid penalties.

  • Deadline – The purchaser is required to file the return and pay any SDLT tax due within 14 days of the transaction.
  • Online Returns – The purchaser's solicitor will register to the HMRC's Stamp Taxes Online Service to submit SDLT returns online. Upon the submission of the return, you will receive an online SDLT5 certificate with a unique transaction reference number (UTRN). Send the UTRN to HM Land Registry when applying to register the land transaction.
  • Exemptions – The purchaser is not required to file the return if it is exempt from SDLT or notification. The land transaction is exempt from notification when the lease term is less than 07 years, and the chargeable consideration is not more than the zero-rate threshold. Additionally, the purchaser can claim reliefs and reduce the amount of SDLT payable.

If the SDLT return is not submitted on time, the purchaser will have to pay a penalty of £100. The amount of penalty is increased to £200 if the return is not submitted three months later. The authorities may impose a tax-based penalty if the SDLT is not paid within 12 months of the filing date.