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.