SDLT replaced Stamp Duty in 2003. Instead of being a tax on documents, SDLT is a tax on land transactions and broadly covers the purchase or transfer of land in England. Once considered a relatively straightforward property tax, the introduction of the higher rate brought with it layers of complexity.
The higher rate 3% on top of the standard l rate of SDLT for the purchase of additional residential properties has applied since 1st April 2016. Whilst you may think that the additional rate of tax only applies to the purchase of buy to let properties or second homes, it can apply to properties bought as your main home.
The standard rate of SDLT applies in England to properties costing above a certain threshold which is currently £125,000. However, if the additional 3% rate applies, the current threshold for residential properties is only £40,000 or more.
There are some exemptions from SDLT such as gifts or matrimonial transfers.
In straightforward cases SDLT is dealt with as part of the conveyancing process. If you already own or part own a share in another residential property you do need to consider the SDLT provisions very carefully. Most conveyancers won’t be able to advise you about SDLT in the more complex cases. In those situations you should take specialist advice as you may be able to legitimately mitigate the effects of SDLT by the application of various reliefs that are available.