It was introduced in place of what was known as Stamp Duty in 2003. SDLT is slightly different to stamp duty in that it is a transfer tax charged on “land transactions”.
You pay SDLT to cover the cost of the legal paperwork involved in transferring property deeds from one person’s name to another. The main document involved in the ownership title of the property is the ‘deed’. It includes a search to ensure you are buying the property from the rightful owner. (In Scotland, you pay “Land and Buildings Transaction Tax” and in Wales you pay “Land Transaction Tax”).
So if you are purchasing a new property after the sale of your current one, this is an expense you must factor in.
There are also different rules for what is termed ‘non-residential’ and ‘mixed use land’. This could be commercial property such as retail units and offices, agricultural land and forestry, any non-residential land or six or more residential units that are bought in one transaction.
Mixed use refers to any property that falls into residential and non-residential categories, such as flats above shops. The threshold for these properties begins at £150,000: between £150,000 and £250,00, the Stamp Duty rate is 2%, and any amount above £250,000 incurs a charge of 5%.
Anyone buying a property for whatever amount, even if it is below the threshold, must fill in and send an SDLT return and pay the tax within 30 days of their completion date. Some buyers may be able to complete the paperwork themselves, but in the majority of cases it is advisable to leave this in the care of an experienced conveyancing solicitor.