Stamp duty land tax

By Tolley
  • (Updated for Budget 2020)
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Stamp duty land tax
  • Introduction
  • Overview
  • Chargeable interests
  • Exemptions
  • Chargeable consideration
  • SDLT rates and thresholds ― overview
  • SDLT rates and thresholds ― residential land or property
  • SDLT rates and thresholds: non-residential or mixed-use properties
  • Higher rate of tax for non-natural persons
  • Partnership transactions
  • Transfer to connected company
  • Transfer to a limited liability partnership (LLP)
  • Anti-avoidance

Introduction

Stamp duty land tax (SDLT) was introduced for land transactions with effect from 1 December 2003. Whereas stamp duty was a tax on documents, SDLT is a tax based on the acquisition of a chargeable interest, whether or not evidenced in writing. 

FA 2003, s 48(1)

When it was originally introduced, SDLT applied to all UK land transactions. Devolution has resulted in Scotland and Wales introducing their own regimes.

From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22. 

Scotland Act 2012, ss 28, 29, Sch 3; Land and Buildings Transaction Tax (Scotland) Act 2013

From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA23–AA34. 

Wales Act 2014, s 15; Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017

Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law which applies to transactions in England and Northern Ireland.

Note that following a consultation  in February 2019, an additional 2% SDLT will be levied on purchases of residential property in England and Northern Ireland by non-UK resident individuals and non-UK resident non-natural persons. This will apply to acquisitions from 1 April 2021. Transitional rules are expected where contracts are exchanged between 11 March 2020 (Budget day) and 31 March 2021 but the transaction is completed or substantially performed on or after 1 April 2021, in order to deter any attempts to forestall the surcharge. The provisions will be legislated in Finance Bill 2020 and a summary of responses is expected to be published shortly. When the proposal was originally announced in Budget 2018, a 1% SDLT surcharge had been expected. 

Overview of Tax Legislation and Rates 2020 , para 2.44

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