Stamp Duty Relief: What Types are Available?
09/09/2019
(Last Updated: 12/04/2023)
14
6 min read
Stamp duty (SDLT) relief is always welcome, given that buying and selling a home is always an expensive process. We regularly help clients claim back stamp duty in these two areas:
- 2nd home stamp duty paid while waiting for a main residence to be sold; and
- Shared ownership first time buyers for whom then Chancellor Hammond phased in relief which was eventually given to all of this group buying after November 22 2017.
However there are other stamp duty - otherwise known as Stamp Duty Land Tax (SDLT) - reliefs and stamp duty exemption areas available for those involved with conveyancing and we've listed those we consider of relevance to this area below.
You do not pay SDLT if you buy a property in:
- Scotland - you pay Land and Buildings Transaction Tax
- Wales - you pay Land Transaction Tax (LTT)
This article therefore examines:
- 1
- 2
- 3
- 4
- 5
- 6
Need help reclaiming stamp duty?
Our solicitors can help you reclaim overpaid stamp duty. Our fees are competitive and the process quick. Click to get a quote or call us today on 0333 344 3234 (local call charges apply). We can help with:
- reclaiming second home stamp duty following the sale of your main residence; and
- stamp duty first time buyer relief on shared ownership purchases up to £500,000 (following the 29th October 2018 budget)
NB Please note that you have a maximum of 3 months only, once your house is sold, to apply to HMRC to reclaim your overpaid stamp duty.
- 1
First Time Buyers' Relief
NB Our main guidance for this relief can be found on the main Stamp Duty Calculator page.
If you, and anyone else you’re buying with, are first time buyers of a residential property you can claim relief on purchases made on or after 22 November 2017 and where the purchase price is no more than £500,000.
You will pay:
- 0% on the first £300,000
- 5% on the remainder up to £500,000
If the purchase price is more than £500,000 you cannot claim the relief and you must pay the standard rates on the total purchase price.
First time buyers of shared ownership properties
If you’re a first time buyer of a shared ownership property you can claim relief on purchases made on or after 22 November 2017, when:
- you intend to occupy the property as your main residence
- the market value of the shared ownership property is £500,000 or less
- You can claim the relief whether you make a market value election, or choose to pay SDLT in stages when the lease is granted.
The relief also applies to the rent payments, so you do not pay any SDLT on the rent.
From 29 October 2018 the relief was extended to include purchases of shared ownership property where the purchaser chooses to pay SDLT in stages.
If you bought your shared ownership property on or after the 22 November 2017 but before 29 October 2018 and paid SDLT, you can claim a refund of tax if you would have qualified for the relief.
- 2
SDLT relief for multiple dwellings
This relief is of relevance to Buy to Let landlords with moderate portfolios.
You can claim back relief when you buy more than one dwelling where a transaction or a number of linked transactions include freehold or leasehold interests in more than one dwelling.
If you claim relief, to work out the rate of tax HMRC charge:
- divide the total amount paid for the properties by the number of dwellings
- work out the tax due on this figure
- multiply this amount of tax by the number of dwellings
The minimum rate of tax under the relief is 1% of the amount paid for the dwellings.
Example
Imagine you bought 5 houses for £1 million - divide this by 5 to get £200,000.
You'd pay £1,500 on £200,000 (0% of £125,000 and 2% of £75,000). You'd then multiply this £1,500 x 5 = £7,500.
Because this is less than 1% of £1 million (i.e. £10,000), you pay £10,000 in tax.
When doesn't multiple dwellings relief apply?
You don't get the relief with a transfer of a freehold reversion or headlease where a dwelling has a long lease of 21 years or more - HMRC in this situation, as well as for any non-residential property in the transaction charge the usual rate without granting any relief.
Additionally, if the number of dwellings is reduced within 3 years of the transaction, you might need to fill in another return and recalculate the tax you owe.
- 3
Building company buys a person's house
If a building company buys a home from someone who's buying a new home from them, the property which the developer - or property trader - buys is SDLT exempt providing certain conditions are met.
The land area which the developer buys alongside the home can't normally exceed 0.5 hectares and the seller must:
- have lived in the property as their main or only home at some time during the 2 years before the building company or property trader bought it
- buy a new home from the house building company intend to live in the new property as their main or only home
When doesn't this relief apply?
Two people swapping houses can't claim this relief.
- 4
Employer buys employee's house
If an employer buys an employee's house because the employee has to relocate, this is exempt from stamp duty if the following conditions are met fully:
- employee lived in the house as their main or only home at some time during the 2 years before their employer bought it
- employer is buying the house because the employee must move as a result of a job relocation
- price the employer or property trader pays is not more than the market value of the property
- area of land the employer or property trader buys is within certain limits - normally 0.5 hectares
- 5
Transfer of Property between Companies
Companies can claim relief within the same group that buy or sell property to or from each other. The buyer of the property can claim the relief if:
- buyer and seller are both companies
- at the transaction's effective date, both companies are members of the same group.
NB There are certain other conditions and restrictions on SDLT Group Relief.
- 6
Registered social landlords
If a registered social landlord buys land and property they can claim relief from SDLT if either:
- most of the board members of the registered social landlord are tenants living in properties from the social landlord
- the seller of the property is a ‘qualifying body’, for example a local council
- a public subsidy funds the sale
If you want to find out more, including any stamp duty changes and how long does stamp duty relief take, please click on Stamp Duty Land Tax Relief for HM Government's official guidance.
Need help reclaiming stamp duty?
Our solicitors can help you reclaim overpaid stamp duty. Our fees are competitive and the process quick. Click to get a quote or call us today on 0333 344 3234 (local call charges apply). We can help with:
- reclaiming stamp duty second home following the sale of your main residence; and
- first time buyer relief on shared ownership purchases up to £500,000 (following the 29th October 2018 budget)
NB Please note that you have a maximum of 3 months only, once your house is sold, to apply to HMRC to reclaim your overpaid stamp duty.
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.
