Stamp duty, otherwise known as stamp duty land tax, is a compulsory tax that must be paid after buying a new property or land to HM Revenue and Customs (HMRC) if the purchase price of the property or land is within or above specific price thresholds. SDLT returns must be filed to HMRC and SDLT paid within 14 days of buying the property or land, otherwise you may be subject to fines of up to £200.

SDLT is applicable to properties and land in England and Northern Ireland. So, if you plan on buying property or land in England or Northern Ireland, it would be a good idea to check the rate of stamp duty to find out how much SDLT you may owe after purchasing before completing the sale. This way, you can better budget for the total cost of the property.

SDLT is a one-off payment and cannot be paid in instalments, nor with a credit card.

Some property or land transactions are exempt from SDLT, and you could claim reliefs or discounts that could lower the amount or potentially void the amount of SDLT that you pay. In the case of the former, you don’t have to fill out the SDLT form or send payment to HMRC – however, you would still need to submit a SDLT return to HMRC upon completion of sale for the latter.

An example of SDLT relief that you could claim is the First Time Buyers’ Relief, which is only applicable if you’re a first-time buyer of a residential property.

For first-time homeowners with properties valued at ≤£625,000, you don’t have to pay SDLT for up to £425,000 of the property price. If the property is worth >£425,000, then you must pay 5% on the remaining amount up to £625,000. If the purchase price is >£625,000, then the standard rate of SDLT applies.

SDLT applies to properties worth more than £250,000. If the cost of the property or land is below this value, then you fortunately don’t have to pay SDLT at all.

The UK Government changed the SDLT rates on 23 September 2022, meaning that the previous stamp duty rates between 1 October 2021 and 22 September 2022 are not applicable to any property or land purchased in England and Northern Ireland after 22 September 2022.

SDLT only begins to apply if you buy properties or land worth:

>£250,000
>£425,000 for first-time buyers (residential properties worth ≤£625,000)
>£150,000 for a non-residential property

The stamp duty threshold determines whether you’re eligible to pay SDLT – and how much.

Since 23 September 2022, the SDLT thresholds for residential properties are:

Property or lease premium/Transfer value SDLT rate
≤£250,000 0%
£250,001 to £925,000 5%
£925,001 to £1.5 million 10%
>£1.5 million 12%

For those buying another property that isn’t their main residence, you’re subject to the additional stamp duty rate, which stands at:

Property or lease premium/Transfer value Higher SDLT rate
≤£250,000 3%
£250,001 to £925,000 8%
£925,001 to £1.5 million 13%
>£1.5 million 15%

The higher SDLT rate only applies if your new purchase doesn’t replace your already sold main residence. These stamp duty surcharges are also applicable if you’re purchasing an additional property as buy-to-lets. That said, if the second property is deemed ‘uninhabitable’, you may be entitled to a refund.

For non-residential properties and mixed land and properties, SDLT rates are as follows:

Property or lease premium/Transfer value SDLT rate
≤£150,000 0%
£150,001 to £250,000 2%
>£250,001 5%

How much stamp duty you pay depends on:

Purchase price of property or land
Eligibility for relief or exemption
The date of purchase
If you’re up for the maths challenge, you can manually work out the amount of stamp duty you could owe.

For example, you purchase a residential property on 5 December 2022 worth £375,000:

0% up to £250,000 of £375,000 = £0
£375,000 – £250,000 = £125,000
5% on the remaining £125,000 = £6,250
Total SDLT to pay = £6,250
Now, what if this was your first residential property as a first-time buyer?

0% up to £425,000 = £0
Total SDLT to pay = £0
Alternatively, what if this was a second dwelling that isn’t replacing your main residence?

3% up to £250,000 of £375,000 = £7,500
£375,000 – £250,000 = £125,000
8% on the remaining £125,000 = £10,000
£7,500 + £10,000 = £17,500
Total SDLT to pay = £17,500
Things can get confusing quickly, which is why we recommend using an online SDLT calculator to help you calculate SDLT more efficiently.

The SDLT system is currently self-assessment based, which means that it is your responsibility (with guidance from your solicitor or conveyancer) to submit correct SDLT returns and to pay HMRC on time.

However, your conveyancer or solicitor will usually pay this on your behalf and will include it on their invoice or service fees. Therefore, it’s important to keep an eye out on the SDLT charge on receipt of their services to ensure that any SDLT owed has been paid accurately and on time.

If HMRC decides to check SDLT returns, you’re in a better position if you keep records of the SDLT transactions for at least 6 years from the date of completion.

SDLT must be paid and the SDLT return filed to HMRC within 14 days of the exchange of contracts! Penalties for late payments include fines and additional interest.

If you find that your solicitor did not pay nor submit a SDLT return for you, you can do this yourself via the HMRC website – so don’t worry!

You cannot ‘avoid’ stamp duty without repercussions – attempting to avoid SDLT without any valid exemptions can result in monetary penalties, so we don’t recommend trying to skip out on paying SDLT.

In particular, if you’re buying a second home that is replacing your main residence that has already been sold, you’re subject to the standard residential rates of SDLT. On the other hand, if this second home isn’t replacing your main residence – or if it is, but your current main residence hasn’t been sold yet – you’ll be subject to pay the higher rate of SDLT (3% surcharge).

However, if the second property that you’re purchasing is deemed unlivable at time of sale, but you paid the higher rate of SDLT, then you may be eligible for a SDLT rebate. The case of P N Bewley vs HMRC ruled that additional residential properties classified as uninhabitable at the effective date of the transaction aren’t subject to the residential rates of SDLT, including the additional 3% rate.

Instead, the non-residential SDLT rates should be applied to them.

This means that if you own a second property that is unsuitable as a dwelling, you may have been overcharged by HMRC and are due a refund – which is exactly where Stamp Duty Claims come in.

Making a claim against HMRC for a SDLT repayment for uninhabitable properties is easier than it seems with Orion Claims. For a feasible claim, strong evidence is needed to prove that the property is unfit to live in. This could be in the form of:

Photographs.
Builders’ quotes.
Building surveys.
Improvement notices.

Particularly, you’re more likely to successfully claim a refund if you can show that the property has a combination of problems such as:

Damp and mould.
Structural issues.
Missing structures or appliances.
Absence of power/water supply.
Roof leaks.

Successful SDLT refund claims repay the amount that HMRC overcharged you, meaning that if you paid the additional 3% rate on an unlivable property, you’ll be refunded an amount based on the non-residential rates.

For example, if you purchased a property for £400,000, charged at the higher residential tax rate, you would’ve paid £19,500 SDLT. However, if this is an uninhabitable property, you should only have paid £9,500 based on non-residential rates. Thus, after successfully claiming a rebate, you should be refunded £10,000.

As you can see, a successful claim can result in you gaining back your money worth hundreds to thousands of pounds.

Orion Claims and our experienced team of consultants are experts in helping property owners claim SDLT refunds on uninhabitable properties.

On a no win – no fee basis, you are given peace of mind that you only have to pay for our services when your SDLT has been successfully refunded. We’re with you every step of the way, offering advice and guidance on what you need to do on your end.

On our end, we handle all of the administrative tasks, as well as communication and litigation with HMRC, representing your best interests.