A land transaction means a transaction where the legal title to a asset changes hands, such as a sale, change of equity or gift (remortgages where there is no change are liable for duty) and the whole of duty payable depends on the actual consideration (purchase price) paid, the whole due being a division of the consideration, between 0% - 5%.
Stamp Duty Land Tax Thresholds
Basic Stamp Editor
Duty is expensed at a distinct rate depending on the whole of consideration paid for the property. The table below shows what rates are payable:
£0 - £125,000 0%
>£125,000 - £250,000 1%
>£250,000 - £500,000 3%
>£500,000 4%
From 06 April 2011 a new higher rate of 5% for transactions worth over £1,000,000 will be introduced.
First Time Buyer Relief
For transactions completed between 25 March 2010 and 24 March 2012 inclusive, where the purchaser is a first time buyer and the price is £250,000 or less, the purchaser will be able to claim full relief from duty. An Sdlt return will still need to be filed and an "Sdlt-5" certificate obtained.
Any private (as opposed to a company) who has never owned a property, whether alone or jointly, everywhere in the world, is a first time buyer and will qualify for relief. A person who has owned a asset in the name of his enterprise would not qualify. Note that a person who buys a asset in England or Wales but was previously resident in an additional one country and owned a asset there would not qualify. A person who owned a asset with a spouse or partner but as part of any disjunction village or disjunction deal did not hold any interest or any of the equity would also fail to qualify.
Where two population are buying jointly and one has never owned a asset but the other has, there will be no entitlement to relief for whether party.
Disadvantaged Area Relief
Certain areas of the country are designated "disadvantaged areas" for the purposes of stamp duty. In these areas full relief from duty can be claimed on transactions between £125,000 - £150,000. As with any claim for relief, an Sdlt return will need to be filed.
To enable you to check if an area qualifies for relief you can use the postcode crusade tool on the Hmrc website. Just use the crusade box on the home page and crusade "stamp duty land tax". Beware however that this tool is not definitive since areas are split by council ward rather than postcode and the postcode crusade may not be spoton for properties that are on the border of a disadvantaged area. If you're not sure, call Hmrc.
Transfers of Equity
Any change of land which results in at least one of the traditional owners remaining on the title following completion is known as a change of equity. These types of transaction do attract duty and the consideration on which it is based is the sum of any money paid to an outgoing owner or by an incoming one and the whole of liability for any mortgage that an incoming or remaining owner takes on. The two examples below elucidate this:
Example 1: Jack and Jill marry and Jack decides to add Jill to the deeds. The asset is mortgaged and so Jill must come to be jointly liable for the debt. Not wanting to take benefit and Jack's good nature she also decides to pay Jack for her share. The house is worth £320,000. The outstanding mortgage is for £200,000 leaving £120,000 of equity. Jill therefore pays Jack £60,000 and takes responsibility for half of the mortgage debt (£100,000). The total consideration she has paid therefore is £160,000 meaning duty of £1600 (1%) is payable. Even if she is a first time buyer she cannot claim relief because Jack is not.
Example 2: Ben and Holly own a house together but have decided to separate. They are not married. The house is worth £200,000 and the outstanding mortgage is for £150,000, for which Ben and Holly are jointly liable, leaving equity of £50,000. Ben decides to buy Holly's share and she agrees to sell it for £25,000 provided Ben takes sole responsibility for the mortgage, which he agrees to do. Ben therefore pays Holly £25,000 and takes on here half of the mortgage debt (£75,000) making a total consideration of £100,000. Duty is therefore "payable" at 0%. This means that although the transaction is not exempt and an Sdlt return has to be filed, because the consideration is less than the £125,000 threshold no tax is due.
Transactions That are Exempt From Stamp Duty
Certain transactions are exempt from the cost of stamp duty and from the requirement to lodge an Sdlt return. The most coarse examples are transfers where the actual consideration is less than £40,000, transfers for no consideration (such as gifts), transfers of equity as a follow of disjunction proceedings or the dissolution of a civil partnership, whether or not a Court Order has been made and assents. An assent is a change by a personal representative of a deceased to proprietor to a beneficiary under a will, in order to give follow to the deceased's wished as stated in the will and to qualify for exemption it must be completed using for As1 or As2.
A change of equity between an unmarried integrate (or a integrate who are not civil partners) made as a follow of a disjunction does not qualify for exemption and nor does a change by a personal representative which is not an assent (i.e. A sale).
Stamp Duty Land Tax Rates and Reliefs