Stamp Duty Land Tax (SDLT) is charged on property transactions in the UK where the value exceeds certain thresholds. However, some transactions qualify for reliefs that can reduce the amount of tax payable - or mean that no SDLT is due.
This guide gives a brief overview of the main reliefs available. It also provides links to the technical guidance for each relief.
To claim relief from SDLT you must complete an SDLT return, even if no tax is due. The quickest and easiest way to complete the return is online.
Bear in mind that not claiming a relief where it's due can be very costly for the buyer. Equally, claiming a relief when it's not due could lead to a penalty being charged.
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Disadvantaged Areas Relief applies to residential property located in areas designated by the government as 'disadvantaged'. It also applies to the residential element of 'mixed use' (business and residential) property. The SDLT threshold in these cases is £150,000 as opposed to £125,000 for equivalent properties in other areas.
To claim this relief, you'll need to enter relief code 07 (DAR – mixed use property) in the SDLT return.
During the period 3 September 2008 to 31 December 2009 inclusive Disadvantaged Areas Relief did not apply to purely residential properties in areas designated as disadvantaged because the SDLT threshold for these properties was temporarily increased to £175,000. However it did apply to the residential element of mixed use properties.
Find out about Disadvantaged Areas Relief
First-time buyers of residential property can apply for SDLT relief if all of the following apply:
This means that from 25 March 2010 to 24 March 2012 inclusive the threshold for qualifying first-time buyers of residential property is £250,000.
Financial institutions can claim the SDLT relief for first-time buyers using alternative finance schemes.
To claim this relief you'll need to enter relief code 32 in the SDLT return.
The relief is not available for any of the following:
Relief is available where a transaction, or a number of linked transactions, include freehold or leasehold interests in more than one dwelling.
Where relief is claimed, the rate of tax charged on the amount paid for the dwellings is set by dividing the amount paid by the number of dwellings.
Example: I buy five houses for £1 million. £1 million divided by five is £200,000. The rate of tax on £200,000 is 1 per cent. The amount of tax due is therefore 1 per cent of £1 million, which is £10,000.
However the minimum rate of tax under the relief is 1 per cent.
The relief does not apply to the transfer of a freehold reversion or headlease where a dwelling is subject to a long lease of 21 years or more.
The rate of tax charged on the amount paid for such a freehold reversion or headlease, or for any non-residential property included in the transaction, is the same as it would be in the absence of relief.
A further return and recalculation of the tax due may be needed if the number of dwellings is reduced within three years of the transaction: for example, if two flats are combined into one.
You can claim this relief if the effective date of the transaction is on or after 19 July 2011. To claim this relief you'll need to enter relief code 33 in the SDLT return.
Read more about SDLT: relief for transfers involving multiple dwellings (PDF 30K)
Read more about SDLT: examples reliefs for transfers involving multiple dwellings (PDF 20K)
Where a house-building company or property trader buys a home from an individual who is buying a new home from them, the purchase by the house builder or property trader is exempt from SDLT if certain conditions are met.
The individual must:
In addition, the area of land that the house building company or property trader buys along with the old home must not exceed certain limits – normally 0.5 hectare.
To claim this relief, you'll need to enter relief code 08 in the SDLT return.
Note that this relief doesn't apply to individuals who swap houses.
Find out more about SDLT relief for house-building companies
An employer or property trader may buy an individual's house because they're moving with their work. This purchase is exempt from SDLT if all of the following conditions are met:
To claim this relief you'll need to enter relief code 09 in the SDLT return.
More about SDLT relief for employers buying an employee's house
A property trader may buy an individual's house to enable the individual to complete the purchase of a home where arrangements to sell the individual's existing home have fallen through. This purchase is exempt from SDLT if all of the following conditions are met:
To claim this relief you'll need to enter relief code 09 in the SDLT return.
Sometimes a local authority agrees to make a Compulsory Purchase Order on a property so that a development by another party - typically a property developer - can proceed. The owner of the property sells it to the local authority and the local authority then sells it to the property developer. As there are two purchases, there would normally be two lots of SDLT to pay. But, so long as the development is being carried out by the property developer, the local authority can get relief from SDLT when it buys the property.
This relief can be claimed by any body that has been given the legal power to compulsorily purchase land or property - whether or not the purchase is made under those powers - provided that the purchase is to facilitate development by a third party.
To claim this relief, enter relief code 10 in the SDLT return.
Get details of SDLT reliefs for compulsory purchases
As a condition of granting planning permission to a developer, a planning authority might require the developer to provide amenities for the community - like a school. These requirements are known as 'planning obligations'. Usually the developer transfers the building to the local authority to run once it's finished. But there may be two successive charges to SDLT if the developer buys the land from its original owner and then transfers the completed building to the local authority.
A relief is available so that the developer doesn't have to pay SDLT on the initial purchase in these circumstances. To claim this relief, enter relief code 11 in the SDLT return.
Find out about SDLT reliefs for complying with planning obligations
A relief from SDLT is available for companies within the same group that buy or sell property to or from each other. The purchaser of the property can claim the relief if both of the following conditions are met:
Certain conditions and restrictions apply to the relief. To claim it, enter relief code 12 in the SDLT return.
Read about the conditions that apply to SDLT Group Relief
So long as certain conditions are met, charities can get relief from SDLT when they buy land and property for charitable purposes. The relief can be withdrawn if either of the following occurs within three years of the transaction:
It's only withdrawn if the charity still owns the property.
To claim the relief, enter relief code 20 in the SDLT return.
Find out more about SDLT Charities Relief
A relief from SDLT is available for right to buy transactions. A right to buy transaction is either of the following:
In both cases the definition also covers the grant of a lease of a dwelling.
The effect of the relief is that SDLT is calculated on the discounted price paid by the purchaser and does not include any additional payments which may become due if, for example, the dwelling is sold on before a certain period has elapsed.
To claim this relief, enter relief code 22 in the SDLT return.
Read about SDLT relief available for right to buy transactions
A relief from SDLT is available where a registered social landlord buys land and property, as long as one of the following conditions is met:
To claim this relief, enter relief code 23 in the land transaction return.
More about the conditions for getting registered social landlords relief
There's a relief from SDLT when a zero-carbon home is bought for the first time. Zero-carbon homes meet certain requirements for generating the energy needed for things like heating and cooking.
In order to qualify for relief a zero-carbon home certificate for the home must be issued by an accredited assessor.
If the property meets the conditions and costs £500,000 or less then there is no SDLT to pay. Properties costing more than £500,000 get a maximum reduction of £15,000 in the amount of SDLT payable.
The purchase price of a zero-carbon home is £600,000.
SDLT is calculated in the normal way at the rate of 4 per cent of £600,000. Normally the tax chargeable would be £24,000 but because £15,000 can be deducted the total amount payable is only £9,000.
To claim this relief, enter relief code 30 in the SDLT return.
Get details of Stamp Duty Land Tax rates and thresholds
There are other much less common reliefs from SDLT that are available in certain circumstances. These are outlined in the HM Revenue & Customs (HMRC) SDLT manual.
Read the SDLT manual on the HMRC website
To claim any of the reliefs (or combination of reliefs) described above you'll need to complete the SDLT return - even if no tax is due. The quickest and most efficient way to complete the return is online. To claim a relief you enter the appropriate relief code from the drop down list at box 9.
If you are completing a paper return (form SDLT1) you can find a list of codes in the SDLT6 guidance notes.
Find out more about completing form SDLT1
Find which relief code to enter on the paper SDLT1 return
Get details of which transactions don't need to be notified to HMRC
