Quick Guide to SDLT
1. SDLT is applicable to all land transactions except securities and licences to occupy whether they are documented or not.
2. A land transaction for SDLT purposes is the acquisition, disposal or variation of an interest in land.
3. Relief from SDLT is available in specified circumstances including for residential properties located in Disadvantaged Areas, for charities and for intra group company transfers.
4. SDLT is payable on “chargeable consideration” which includes price paid, rent, lease premiums, amount of mortgage transferred, and value of works undertaken.
5. An SDLT Return must be completed and signed by or on behalf of the purchaser and submitted to the Inland Revenue within the earlier of (1) 30 days of settlement of the transaction (2) entry being taken to the property or (3) most of the price or first payment of rent being paid.
6. In some cases, the Inland Revenue require an SDLT Return even when no SDLT is payable.
7. Late Returns attract fixed penalties and interest even where no SDLT is payable.
8. Tenants and Landlords may be liable to pay SDLT on the granting assignation, varying and surrendering of Leases.
9. The rates of SDLT payable for residential properties are
| Relevant consideration | Percentage |
Not more than £125,000 | 0% |
More than £125,000 but not more than £250,000 | 1% |
More than £250,000 but not more than £500,000 | 3% |
More than £500,000 | 4% |
The rates of SDLT payable for non-residential or mixed residential and commercial properties are
| Relevant consideration | Percentage |
Not more than £150,000 | 0% |
More than £150,000 but not more than £250,000 | 1% |
More than £250,000 but not more than £500,000 | 3% |
More than £500,000 | 4% |
10. When a Lease is granted, SDLT is payable on any premium at the rates noted above ( the rate is a minimum of 1% if the rent is over £1,000 per annum) and on 1% of the Net Present Value of the Lease calculated on the basis of the rent and term of the Lease using this formula:-
where:
ri is the rent payable in year i,
i is the first, second, third, etc year of the term,
n is the term of the lease, and
T is the temporal discount rate currently 3.5%
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.