30 Sep 2010

Stamp taxes and duties

Transfers of land and buildings (consideration paid)

The stamp duty land tax (SDLT) holiday, which exempts residential properties up to the value of £175,000 from SDLT, is extended until 31 December 2009.

From 1 January 2010, the zero and 1% rates apply as per the table below:

Stamp Duty Land Tax (SDLT)

RateResidential in disadvantaged areas
Residential outside disadvantaged areas
Non-Residential
Total Value of Consideration #colspan# #colspan# #colspan#
Zero£0 - £150,000£0 - £125,000£0 - £150,000
1%Over £150,000 - £250,000Over £125,000 - £250,000Over £150,000 - £250,000
3%Over £250,000 - £500,000Over £250,000 - £500,000Over £250,000 - £500,000
4%Over £500,000Over £500,000Over £500,000

(On the 2 September 2008 a SDLT holiday was announced, increasing the starting rate of SDLT for residential property to £175,000. This was due to expire on 3 September 2009. Budget 2009 announces that this will be extended until 31 December 2009.)

New leases (lease duty)

Duty on the premium is the same as for transfers of land (except that special rules apply for non-residential land and property premium where rent exceeds £1,000 annually. The rules no longer apply to residential property from 12 March 2008). Duty on the rent is charged on any part of the net present value (NPV) which exceeds the threshold.

RateNet Present Value of Rent
Residential in disadvantaged areasResidential outsidedisadvantaged areasNon-Residential
Slice of NPV
Zero£0 - £150,000£0 - £125,000£0 - £150,000
1%Over £150,000Over £125,000Over £150,000

For new leases, the rates applicable in respect of the premium are the same as for transfers of land and buildings (except that special rules apply where the rent exceeds £1,000 annually for non-residential land and property. The £600 threshold has been abolished for residential land and property with effect from 12 March 2008).

For the rental element of new leases, the charge is based on the net present value (NPV), which is the total of the discounted annual rental payments. The NPV is charged at 1 per cent on the excess over £125,000 for residential land and property and 1 per cent on the excess over £150,000 for non-residential land and property.

Legislation will be introduced in Finance Bill 2010 to provide a Stamp Duty Land Tax relief where:

  • an individual or individuals jointly purchase a major interest in land which is wholly residential
  • the consideration is more than £125,000 but not more than £250,000
  • that individual (or all of them) intends to occupy the property as his/her or their only or main residence
  • an individual or individuals has or have not previously purchased such an interest or its equivalent anywhere in the world
  • the effective date of the transaction is on or after 25 March 2010 and before 25 March 2012.

At present the highest SDLT rate of 4 per cent applies to purchases where the consideration exceeds £500,000. Legislation in Finance Bill 2010 will add a new rate of 5 per cent for transactions in residential property where the consideration for the transaction exceeds £1 million.

The new higher rate will apply to residential purchases where the effective date (normally the date of completion) is on or after 6 April 2011.

Transfers of shares and stocks

The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2010-11.