Disadvantaged Areas Relief, can reduce the amount of Stamp Duty Land Tax (SDLT) payable in areas designated by the government as 'disadvantaged'.
This guide explains which areas and properties Disadvantaged Areas Relief applies to, the current rates, and how to work out how much SDLT is payable if a property qualifies.
To make a claim for Disadvantaged Areas Relief you must complete an SDLT return even though there is no SDLT payable. The quickest and easiest way to do this is online.
On this page:
Disadvantaged Areas Relief applies to:
First-time buyers of residential property don't need to claim Disadvantaged Areas Relief because they can already claim SDLT relief on purchases of up to £250,000 - including in disadvantaged areas.
However, first-time buyers can't claim the above relief if buying a mixed use property. In this case they should claim Disadvantaged Areas Relief, if available. To check what counts as mixed use see the later section 'Definition of residential and mixed use'.
SDLT relief for first-time buyers – find out more
Between 3 September 2008 and 31 December 2009 a temporary SDLT threshold of £175,000 was introduced for purchases of residential property. Because this was higher than the Disadvantaged Areas Relief threshold of £150,000, Disadvantaged Areas Relief only applied to the residential element of mixed use property transactions (to which the higher threshold did not apply) during this period.
The table below shows the periods during which Disadvantaged Areas Relief applies or has previously applied for different types of property.
| Dates | Types of property qualifying for Disadvantaged Areas Relief |
|---|---|
| 30 Nov 2001 - 16 March 2005 | residential, non residential, mixed use |
| 17 March 2005 - 2 Sept 2008 | residential, mixed use residential element |
| 3 Sept 2008 - 31 Dec 2009 | mixed use residential element |
| 1 Jan 2010 onwards | residential, mixed use residential element |
The table below sets out the relevant rates and thresholds for purchases on or after 1 January 2010. These rates apply to residential properties and the residential element in a mixed use property.
| Residential property value (including residential element of a mixed use property) in a disadvantaged area | SDLT rate |
|---|---|
| Up to £150,000 | Zero |
| Over £150,000 to £250,000 | 1% |
| Over £250,000 to £500,000 (same as all other residential purchases) | 3% |
| Over £500,000 (same as all other residential purchases) | 4% |
Disadvantaged Areas Relief is available in nearly 2,000 areas in the UK. In England, Wales and Northern Ireland they're based on local government wards and electoral divisions. In Scotland they're based on 'postcode areas'.
To qualify for relief, a property (or the land on which it stands) must have been situated in a qualifying area at the 'relevant date'.
The relevant dates are:
A property will also qualify for relief if, at 27 November 2001, it had the same full postcode as a property which was situated in a qualifying area at the relevant date.
If you know the postcode of the property, you can check to see if it qualifies for Disadvantaged Areas Relief by using the HM Revenue & Customs (HMRC) postcode search tool.
Note that the search tool is for guidance only and doesn't identify every qualifying postcode. Newly built properties in particular may not come up. See below for alternatives.
If you don't know the postcode, you can call the Postcode Helpline on Tel 0845 711 1222. Or you can find it on the Royal Mail website.
Use the postcode search tool on the HMRC website
Find a postcode on the Royal Mail website
If you can't find a postcode for the property, or the postcode search tool doesn't identify it as qualifying but you still think it might be, you will have to check it against the list of qualifying areas. The local authority planning department or the developer that built the property may be able to help with this.
Download a list of Disadvantaged Areas Relief qualifying areas in England (PDF 93K)
Download a list of Disadvantaged Areas Relief qualifying areas in Wales (PDF 24K)
Download a list of Disadvantaged Areas Relief qualifying areas in Scotland (PDF 12K)
Download a list of Disadvantaged Areas Relief qualifying areas in Northern Ireland (PDF 13K)
The definitions below will help you work out when Disadvantaged Areas Relief is available for the residential part of mixed use properties.
Residential property is:
Certain types of accommodation are always treated as either used or not used as a dwelling for this purpose.
Read more about properties which are and aren't treated as a dwelling
If six or more separate properties (including any land) are bought in a single transaction, it's treated as 'non-residential'. SDLT is payable in the normal way and Disadvantaged Areas Relief is not available.
A property might be classed as part residential and part non-residential - for example a shop with a flat above. In this case only the amount paid for the residential part qualifies for Disadvantaged Areas Relief.
In order to work out whether you can get Disadvantaged Areas Relief for a mixed use property you have to apportion the amount paid for the property between the residential and non-residential parts on a 'just and reasonable' basis. This might be done on the basis of percentage areas quoted in planning applications. Or it might be based on the amount of floor space used for residential and non-residential purposes. Other methods can also be used. If the amount apportioned to the residential part is £150,000 or less, Disadvantaged Areas Relief will apply to that part.
A freehold property in a disadvantaged area is bought for a total of £300,000. It consists of a shop below and a flat above. It's worked out that the flat - which is only used for residential purposes - is 40 per cent of the whole property. So the cost of the flat is £120,000 and the cost of the shop is £180,000.
There's no SDLT to pay on the flat because Disadvantaged Areas Relief is available for residential property transactions of £150,000 or less.
But there will be SDLT to pay on the shop because:
So SDLT is chargeable at the normal rate. In this example it's payable on the £180,000 paid for the shop at the rate of 1 per cent.
'Stamp Duty Land Tax rates and thresholds'
If the part of the premium that is attributed to the residential part of a mixed use property is £150,000 or less, this part of the premium can qualify for Disadvantaged Areas Relief.
If it's a new lease and the 'net present value' of the rent attributed to the residential part is £150,000 or less, this part of the rent can qualify for Disadvantaged Areas Relief.
You can find out how to calculate the net present value in our guide on leasehold properties. You can also use the online calculator.
Find out about SDLT and leasehold properties
Use the Stamp Duty Land Tax Lease calculator to work out the net present value
You claim Disadvantaged Areas Relief in the SDLT return, which you must complete and send in within 30 days of the transaction. The easiest and most efficient way to do this is online.
Even if no SDLT is payable, you still complete the return. If you don't send the return in on time, you may face a penalty.
When you claim the relief, you need to enter the correct code on the return. If filing online you simply enter the code when prompted. If completing an SDLT1 enter the code in box 9. The codes are:
Find out about completing the SDLT return
Since 17 March 2005 non-residential property transactions haven't qualified for Disadvantaged Areas Relief.
But before that date, the relief did apply. Under 'transitional provisions' relief may still be available for non-residential transactions where a contract was entered into on or before 16 March 2005 but completed after that date.
Find out about transactions before 17 March 2005
