A new rate of stamp duty land tax (SDLT) will become effec­tive for pur­chas­es on or after 6th April 2011. Leg­is­la­tion in the Finance Bill 2010 will intro­duce a high­er SDLT of 5 per cent for pur­chas­es of res­i­den­tial prop­er­ty where the con­sid­er­a­tion exceeds £1million.

At present, the high­est SDLT rate of 4 per cent applies to pur­chas­es where the con­sid­er­a­tion exceeds £500,000.

Stamp Duty Land Tax (SDLT) is gen­er­al­ly payable on the pur­chase or trans­fer of prop­er­ty or land in the UK where the amount paid is above a cer­tain thresh­old. In addi­tion most UK land and prop­er­ty trans­ac­tions must be noti­fied to HM Rev­enue & Cus­toms (HMRC) on a Stamp Duty Land Tax return with­in a cer­tain time lim­it — even if no tax is due.

Var­i­ous rules apply for work­ing out how much, if any, SDLT is payable. The cal­cu­la­tion — which is based on a val­ue called the charge­able con­sid­er­a­tion’ — can vary depend­ing on whether the land is res­i­den­tial or non-res­i­den­tial, free­hold or lease­hold, or on oth­er fac­tors such as whether sev­er­al trans­ac­tions are linked.

From 06/04/11 SDLT rates and thresh­olds for res­i­den­tial prop­er­ty are as follows;

  • £125,000 — £250,000 — 1%
  • £250,001 — £500,000 — 3%
  • £500,001 — £1,000,000 — 4%
  • £1,000,001 & Over — 5%

A tem­po­rary first time buy­er’s thresh­old was intro­duced mean­ing no SDLT is payable in the 1% brack­et. A first time buy­er is classed as a per­son who has not pre­vi­ous­ly acquired any inter­est in land which includes res­i­den­tial prop­er­ty sit­u­at­ed any­where in the world. The first time buy­er’s £250,000 thresh­old applies from 25 March 2010 up to 24 March 2012 inclusive.