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Advice on Maximising Your Save on Stamp Duty

Published by UK Property Accountants
Published Date: June 23, 2023

Are you dreaming of owning a beautiful property in the UK? Well, before you embark on your real estate adventure, let's delve into the intriguing world of Stamp Duty Land Tax (SDLT). While purchasing a property, the amount you need to pay is determined by the property's value.

In this article, we will unveil some insider tips and tricks to help you navigate the maze and save big on SDLT.

First Time Buyers Relief

If you buy your first home under £625,000 you will be eligible for the relief what is known as first time buyers’ relief. As of the date this blog was written, you will pay:

No SDLT up to £425,000 and 5% SDLT on portion from £425,000 to £625,000.

First time buyers’ relief applies where following conditions are met:

  • There should be purchase of single dwelling.
  • Relevant consideration must not be more than £625,000.
  • The purchaser or purchasers are first time buyers intending to occupy the dwelling as a main residence.
  • The transaction should not be linked to another land transaction.

Negotiate the Purchase Price of The Property

Stamp Duty Land Tax is charged on purchase price

Stamp Duty Land Tax (SDLT) is charged on purchase price paid when purchasing the property. Different rates of stamp duty land tax are calculated on the part of property price which falls within each band.

If you purchase your second home at purchase price of £900,000 you will pay 3% up to £250,000 and 8% on remaining £650,000. Total SDLT charged here would be £59,500.

However, if you are able to negotiate and drop the purchase of the property to £850,000 SDLT charged would be £55,500. Saving you £4,000 on SDLT.

Calculate the accurate amount of SDLT using our in house SDLT Calculator.

Invest in Residential Property With Multiple Dwellings!

If you purchase property with more than one dwelling in a single transaction you will be able to claim what is known as multiple dwellings relief. Multiple Dwellings Relief (MDR) is a tax relief provided by HM Revenue and Customs (HMRC) in the United Kingdom.

It applies when someone purchases more than one dwelling, such as a block of flats, and pays Stamp Duty Land Tax (SDLT) on the transaction. MDR reduces the amount of SDLT payable by treating the purchase as the acquisition of multiple properties rather than one single transaction. This can result in a significant reduction in the amount of SDLT payable.

You can learn more about the benefits of Multiple Dwellings Relief (MDR) and how it can reduce your Stamp Duty Land Tax liability on our primary guide.

Gift the Property

Pay no Stamp duty tax

If you gift a mortgage free property to an individual, you won’t have to pay Stamp Duty Land Tax. SDLT is charged on consideration, so if the gifted property is mortgage free, there is no SDLT charged to the property.

However, you should be careful if you gift the mortgaged property.

Pay for Your Chattels separately

Stamp Duty Land Tax is charged on the consideration of the property. If value of property includes chattels it increases the value of property therefore increasing the stamp duty land tax.

It is advised to pay for your chattels separately which can save your Stamp Duty Land Tax.

Chattels are tangible movable property, it can include items like:

  • Household furniture
  • Paintings, antiques
  • Items of plant and machinery not permanently fixed to the building

Invest in Derelict Property

Derelict Property

If you are looking to purchase a new residential property, it might be a good idea to purchase a derelict property.

Derelict property is basically an uninhabitable property to an extent that it can no longer be classed as a dwelling.

You can buy these properties at a cheaper price refurbish them and sell or live in it.

The idea is that you get to claim non-residential SDLT rates which is much cheaper than the residential rates. Which can save you a lot of Stamp Duty Land Tax.

Learn more here: Stamp Duty on Uninhabitable Property - A Complete Guide on Derelict.

Conclusion

It's important to note that these tips are based on the information available at the time of writing, and it's always advisable to consult with a tax professional or solicitor to ensure you're taking advantage of all applicable exemptions and reliefs while complying with the current regulations.

By exploring these strategies, you can potentially save a significant amount of money on Stamp Duty Land Tax when purchasing a property in the UK.

At UKPA, we specialise in property accounting and tax advisory services. Our experienced team offers tailored solutions to meet your specific needs. 

We assess your property and compute potential savings in SDLT through our tax department. Maximise your tax efficiency and minimise your SDLT burden by leveraging our expertise.

Contact us today to discuss your property business and benefit from our professional assistance.

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