HMRC charge Stamp Duty Land Tax (SDLT) on property and land transactions in the UK when the value of the purchase exceeds a certain threshold.
This doesn’t necessarily apply to all transactions, however. Due to your personal circumstances, you may be eligible for some relief or be exempt from paying any SDLT at all.
Below are some of the instances where your property could be exempt from stamp duty. If you think you’re exempt, it’s still advisable you seek the advice of a tax accountant or use a stamp duty calculator to double-check.
First-time buyers’ relief
The most common instance where someone is exempt from stamp duty is for first-time buyers.
If you’re buying property for the first time, and this includes anyone else buying with you, then you’re entitled to the following relief:
You’ll pay 0% stamp duty on the first £300,000 of the property sale price. In addition to this, you are only subject to 5% on the balance between £300,000-£500,000.
Divorce/Dissolving a civil partnership
You do not have to pay SDLT when transferring land or property to your partner if you’ve been directed to so in a court order due to divorce or dissolving a civil partnership.
Also, even if the transfer value is more than the SDLT transfer, you do not need to tell HMRC about the transfer.
Receiving land or property in a will
You do not have to pay SDLT on property or land you inherit under the terms of a will. This is the case whether or not you take on an outstanding mortgage too.
Receiving land or property as a gift
You can receive land or property as a gift without being liable for SDLT. This is only if the property does not have an outstanding mortgage. If you’re taking on a mortgage, you will have to pay SDLT if the value of the outstanding mortgage balance is over the threshold.
An employer buying an employee’s home
You may be exempt from paying SDLT if you’re buying a house from an employee who is moving because of work.
There are a few conditions that need to be met. These are:
- The employer is not paying more than fair market value for the home.
- The employee has lived in the property as their main residence within 2 years prior to their employer purchasing it.
- The property and associated land are within a certain limit (currently 0.5 hectares).
- The employer is buying the home strictly for the reason that their employee has to move as part of a job relocation.
If you’re a registered charity you may be exempt from paying SDLT if you meet certain criteria.
Typically, a charity can apply for some relief or total exemption if they can prove they are buying land or property solely for charitable purposes.
HMRC can still withdraw the relief within three years of the transaction if the organization ceases being a charity, uses the property for non-charitable purposes, or for any other reasons they deem a breach of the terms.