Stamp Taxes rates
The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2007-08.
Stamp Duty Land Tax (SDLT)
SDLT rates for residential property
The table below applies for all freehold residential purchases and transfers and the premium paid for a new lease or the assignment of an existing lease. (If the property will be used for both residential and non-residential purposes the rates differ - please see the section SDLT for non-residential or mixed use property.)
New thresholds from September 2008
The £175,000 threshold shown in the table applies from 3 September 2008 until 2 September 2009 inclusive (unless the lease is for less than 21 years - see the later section on this).
If the transaction involves the purchase of a new lease with a substantial rent there may be an additional SDLT charge to that shown below, based on the rent. See the later section SDLT on rent - new residential leasehold purchase for more detail.
| Purchase price/lease premium or transfer value | SDLT rate |
| Up to £175,000 (until 2 Sept 2009 - see note above) | Zero |
| Over £175,000 to £250,000 | 1% |
| Over £250,000 to £500,000 | 3% |
| Over £500,000 | 4% |
If the value is above the payment threshold, SDLT is charged at the appropriate rate on the whole of the amount paid. For example, a house bought for £180,000 is charged at 1 per cent, so £1,800 must be paid in SDLT. A house bought for £350,000 is charged at 3 per cent, so SDLT of £10,500 is payable.
Special rules for residential leases of less than 21 years
Note that the temporary Stamp Duty Land Tax threshold of £175,000 for residential property transactions does not apply to:
- the assignment of an existing lease which has less than 21 years to run
- the grant of a lease for a term of less than 21 years
In these cases the normal thresholds of £125,000 (£150,000 if the property is situated in a disadvantaged area) apply.
Properties bought in a disadvantaged area
Disadvantaged Areas Relief (whereby residential properties bought in areas designated by the government as 'disadvantaged' had a higher SDLT threshold of £150,000) can still apply for residential only property purchases. However, as the residential property thresholds introduced from September 2008 also apply to most residential property (except those where leases are for less than 21 years), purchasers are advised to use the new higher thresholds. The only exception is where the lease is for less than 21 years - as described earlier.
Some property transactions in a disadvantaged area may have both residential and non-residential parts - eg a shop with a flat above. In this case, the temporary £175,000 threshold between 3 September 2008 and 2 September 2009 inclusive does not apply. For SDLT purposes, the property value is apportioned on a fair and reasonable basis between the two uses. If the amount attributed to the residential element does not exceed £150,000 then Disadvantaged Areas Relief will apply to that element and a separate £150,000 threshold will apply to the non-residential element.
SDLT on rent - new residential leasehold purchase
When a new residential lease has a substantial annual rent, SDLT is payable on both of the following, which are calculated separately and then added together:
- the lease premium (purchase price) - see the earlier table
- the 'net present value' (NPV) of the rent payable
The NPV is based on the value of the total rent over the life of the lease and can be worked out using HMRC's online calculator.
| Net present value of rent - residential | SDLT rate |
| £0 - £175,000 | Zero |
| Over £175,000 | 1% of the value that exceeds £125,000 |
For example, if the NPV of the rent on a new residential lease totals £200,000, then the SDLT on this rent is 1 per cent of £75,000, or £750. This charge would then be added to the SDLT charged on the premium paid for the new lease, shown in the previous table.
| Net present value of rent - residential | SDLT rate |
| £0 - £150,000 - in disadvantaged area | Zero |
| £0 - £ 125,000 - not in disadvantaged area | Zero |
| Over £150,000 - in disadvantaged area | 1% of the value that exceeds £150,000 |
| Over £125,000 - not in a disadvantaged area | 1% of the value that exceeds £125,000 |
Different rates apply for mixed use purchases - see below.
SDLT rates for non-residential or mixed-use properties
The table below applies for freehold and leasehold non-residential and mixed-use purchases and transfers.
| Purchase price/lease premium or transfer value (non-residential or mixed-use) | SDLT rate |
| Up to £150,000 – annual rent is under £1,000 | Zero |
| Up to £150,000 – annual rent is £1,000 or more | 1% |
| Over £150,000 to £250,000 | 1% |
| Over £250,000 to £500,000 | 3% |
| Over £500,000 | 4% |
Note that in the above the annual rent is the highest annual rent payable in the first five years of the lease, not the net present value (NPV) used to determine any tax payable on the rent (see below).
SDLT on rent - new non-residential or mixed-use leasehold purchase
When a new non-residential or mixed-use lease has a substantial annual rent, SDLT is payable on both of the following which are calculated separately and then added together:
- the lease premium or purchase price - see the table above
- the 'net present value' (NPV) of the rent payable (this is based on the value of the total rent over the life of the lease and can be worked out using HMRC's online calculators)
| Net present value of rent – non-residential | SDLT rate |
| £0 - £150,000 | Zero |
| Over £150,000 | 1% of the value that exceeds £150,000 |
