STAMP DUTY
Introduction
Stamp Duty has become one of the most contentious taxes levied in the UK. This can be explained by the nature of the tax. Stamp Duty is a catch-all term for a number of different taxes that are levied on documents which transfer ownership of property or shares. Stamp Duty has become intrinsically linked with house-buying, but it also applies to several other types of purchase.
Property
The way in which SDLT is levied is significantly different to the way in which Stamp Duty or SDLT are levied. SDLT is calculated on a sliding scale, with charges of between 1% and 4% being required, depending on the total value of the property being transferred. There is, however, a non-payment threshold; if the property being transferred is being sold for less than £150,000 then no SDLT is due
Stocks and Shares
Stamp Duty and SDRT are levied differently; both of these taxes are payable at a flat rate of 0.5% of the value of the shares being transferred. Only one of these taxes will be payable on each transaction, and the type you will pay will depend on the method by which the transaction is completed. If you are making a transfer using a physical stock transfer form then you will be required to pay Stamp Duty, while Stamp Duty Reserve Tax is due on transfers that take place electronically, without the use of such a form. Inevitably, with the increased reliance on the internet for share trading, SDRT is rapidly becoming the most-often levied form of Stamp Duty on share transfers.
Similarly, the way in which duties must be paid to HM Revenue and Customs is different depending on the type of tax being paid. As a basic rule, SDLT is the responsibility of the property buyer, although in reality it will be your solicitor who takes care of the process for you. Stamp Duty is also the responsibility of the buyer, who will be required to declare it themselves; this can be done on the HMRC website, where you will also find a Stamp Duty calculator. Finally, SDRT is often either included in the purchase price or will be automatically deducted by the CREST electronic transfer system, if this is used.
Summary of Rates
Transfers of land and buildings (consideration paid)
| Residential in disadvantaged areas | Residential outside disadvantaged areas | Non-residential |
| Total value of consideration | ||
| £0 - £150,000 | £0 - £125,000 | £0 - £150,000 |
1% | Over £150,000 - £250,000 | Over £125,000 - £250,000 | Over £150,000 - £250,000 |
3% | Over £250,000 - £500,000 | Over £250,000 - £500,000 | Over £250,000 - £500,000 |
4% | Over £500,000 | Over £500,000 | Over £500,000 |
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.
| Net Present Value of rent | ||
| Residential in disadvantaged areas | Residential outside disadvantaged areas | Non-residential |
| Slice of NPV | ||
| £0 - £150,000 | £0 - £125,000 | £0 - £150,000 |
1% | Over £150,000 | Over £125,000 | Over £150,000 |
Transfers of shares and stocks
The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is payable at 0.5 per cent for 2008-09.
More information
For more detailed information from the H M Revenue & Customs site click on the image below:
More advice
For more specific advice please contact us by telephone on 01299 879140.
