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NewslettersIs stamp duty the same as SDLT?
Stamp duty and SDLT are taxes that buyers of second homes and residential properties must pay. However, the two taxes are different. They are different in many ways, each having its own set of rules. Stamp duty is a tax usually applicable on real estate transactions within a particular jurisdiction. In contrast, SDLT stands for stamp duty land tax, a specific type of stamp duty applicable to residential property transactions in England and Wales only. Let’s take a closer look at the similarities and differences between these two taxes so that you can make an informed decision when purchasing or selling real estate.
What is stamp duty?
Stamp duty refers to a fee that must be paid to the government to complete a real estate transaction. It is often based on a percentage of the property’s value. Specifically, stamp duty is the tax imposed on the transfer of title of shares in a company. It can also refer to a tax on admission tickets to public exhibitions, etc. More recently, it is often used to refer to taxes on certain types of contracts, such as real estate transactions (i.e. buying a house or a plot of land), share transfers, etc. It is a transfer tax requiring the seller of a property to pay a certain percentage of the property’s price to the government.
It is imposed in most countries and a few jurisdictions of the United Kingdom. The amount of stamp duty varies depending on real estate transactions and the property’s value. In the UK, stamp duty is payable on commercial and residential real estate purchases. It is also payable when transferring shares in a company.
How much does stamp duty cost?
Stamp duty rates in the UK vary depending on the real estate transaction you are completing. The rates below are for residential properties only and will be applicable from 1st December 2018. - Residential property purchased for less than £125,000: 0% - Residential property purchased for £125,001-£250,000: 2% - Residential property purchased for £250,001-£925,000: 5% - Residential property purchased for £925,001 and over: 12% If you’re buying a residential property, you will pay the higher rate of stamp duty if the property’s value is £250,000 or more.
You must pay the stamp duty based on the property’s value. The table below shows the amount of stamp duty you can expect to pay on a £250,000 property.
What is SDLT?
Stamp duty land tax (SDLT) is a specific stamp duty applicable to only residential property transactions in England and Wales. It is a tax imposed on purchasing residential property in England and Wales above a certain threshold. It is not applicable in Scotland or Northern Ireland. In England and Wales, SDLT applies at a rate of either 2% on properties worth £150,000 or less, 5% on properties worth between £150,001 and £250,000, 10% on properties worth between £250,001 and £925,000 and 12% above that. In Wales, the rates are the same as for England, except for the £150,001 threshold, which is 3%.
Similarities between stamp duty and SDLT
SDLT and stamp duty are transfer tax imposed on residential property purchases. Both taxes are calculated as a percentage of the property’s purchase price. Both taxes are payable on commercial property and residential property.
Differences between stamp duty and SDLT
Stamp duty is a transfer tax paid by the buyer, and SDLT is a transfer tax paid by the seller. You will have to pay stamp duty to your local government authority when buying a house, while you will have to pay SDLT to Her Majesty’s Revenue and Customs when selling a house. Stamp duty is applicable in most countries, while SDLT only applies in England and Wales.
Stamp duty is charged on the transfer of shares in a company, while SDLT is charged on purchasing a residential property. Stamp duty is applied to the value of the property, while SDLT is applied to the value of the property plus the value of any associated costs, such as stamping fees.
Conclusion
Stamp duty is a transfer tax applied to the purchase or transfer of shares in a company, and SDLT is a transfer tax applied to residential property. There are a few differences between the two taxes as well. The purchaser pays stamp duty, and the seller pays SDLT. Stamp duty varies depending on real estate transactions, and SDLT varies depending on the property's value and associated costs.
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