Stamp Duty Land Tax (SDLT)

How does it work? As an investor, it is important to take account of all of the costs of your investment, and with the changes in the tax legislation over the last few years, Stamp Duty has become a main cost. The key therefore for any investor is finding ways to reduce the impact of this cost.

For residential investment properties (assuming you have already one property in your own name), whether bought in your own name or through a corporate structure, will incur the higher rates for additional properties that are purchased. This starts at 3% up to £125,000, then 5% up to £250,000, 7% up to £925,000, 13% up to £1.5 million and 15% for anything over £1.5 million. 

Stamp DutyFor non-residential and mixed-use properties the stamp duty is 0% up to £150,000, 2% up to £250,000 and 5% on the portions above. 

It is therefore advantageous from a Stamp Duty point of view if a property or purchase can be categorised as a non-residential or a mixed-use property.

H M Revenue and Customs definition of Non-residential property include:

  • commercial property, eg shops or offices
  • agricultural land
  • forests
  • any other land or property which is not used as a residence
  • 6 or more residential properties bought in a single transaction

A ‘mixed-use’ property is one that has both residential and non-residential elements, eg a flat connected to a shop, doctor’s surgery or office.