BN 20 - Stamp Duty Land Tax: Raising the Threshold for Residential Transactions

Who is likely to be affected?

1. Anyone who enters into a land transaction relating to residential property where the chargeable consideration exceeds £120,000 but does not exceed £125,000.

General description of the measure

2. The measure raises the threshold for stamp duty land tax on residential transactions from £120,000 to £125,000.

Operative date

3. Any land transaction the ‘effective date’ of which (see below) is on or after 23 March 2006.

Current law and proposed revisions

4. Stamp duty land tax is charged, at varying rates, on the consideration given for a land transaction. At present no tax is payable on transactions in residential property if the consideration does not exceed £120,000. Tax is payable at 1% if the consideration exceeds £120,000 but does not exceed £250,000.

5. This measure raises the threshold to £125,000. No tax will be payable on transactions in residential property if the consideration does not exceed £125,000. Tax will be payable at 1% if the consideration exceeds £125,000 but does not exceed £250,000.

6. This change takes effect for transactions the ‘effective date’ of which is on or after 23 March 2006. The effective date is normally the date of completion, not the date of exchange of contracts. However the effective date may be earlier than the date of completion if the contract is ‘substantially performed’, for example if the purchaser takes possession or pays the purchase price in advance of completion. Most residential contracts will not be ‘substantially performed’ in advance of completion.

Further advice

7. If you have any questions about this change, please contact the Stamp Taxes Help Line on 0845 603 0135.