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What is Stamp Duty Land Tax?

SDLT replaced Stamp Duty in December 2003 and is a tax on the purchase price of land and buildings. When you buy a property you may have to pay SDLT.

Paying SDLT

You don't have to pay any SDLT on residential property costing £125,000 or less. Above this amount you pay between one and four per cent of the purchase price.

Purchase price of residential property	Rate of SDLT (percentage of the total purchase price)
£0 - £125,000	0%
£125,001 - £250,000	1%
£250,001 - £500,000	3%
£500,001 or more	4%

You can check current rates of SDLT on the HM Revenue & Customs (HMRC) website.

• SDLT rates from HMRC (opens new window)

SDLT Disadvantaged Areas Relief (DAR)

DAR is available for purchases of residential property situated in a qualifying area where the transaction is considered £150,000 or less.

From 17 March 2005 DAR isn't normally available on non-residential property. See HMRC's website for further information and 'transitional  provisions' for purchases before this date.

• More on Disadvantaged Areas Relief - HMRC website (opens new window)

You can also check the HMRC website to see if the property you are buying is in a 'qualifying area'. (You'll need to scroll down to use the postcode search tool.)

• List of qualifying areas from HMRC (opens new window)
• Use HMRC's DAR postcode search tool (opens new window)

Zero carbon homes

A zero-carbon must be ‘zero carbon’ over the course of the year. The house can be connected to mains electricity and gas but needs to have sufficient additional renewable power to cover the average consumption of a house over a year. 

In order to achieve this, the fabric of the building will have to be insulated and built to very high standards and the house will need to incorporate renewable energy technologies.

The 2007 Budget announced that relief from SDLT for zero-carbon homes would be introduced from 1 October 2007.  All qualifying houses under £500,000 will be exempt and houses over £500,000 will have their SDLT bill reduced by £15,000.

• More on zero carbon homes - HMRC website (opens new window)

Paperwork

As the buyer of the property, you are responsible for completing the land transaction return and paying the SDLT.

However, in practice, your solicitor or licensed conveyancer will usually handle this for you and send it to HMRC on your behalf.

You should check that all the information on the form is correct and complete before signing the declaration.

More useful links

• More information for first time buyers (home and community section)
• Mortgages - how they work and where to find one
• Planning for buying a home