Annual tax on enveloped dwellings (ATED)

Stamp Duty Land Tax (SDLT) is a tax charged on the purchase or acquisition of property or land over a certain price in England and Northern Ireland. Non-residents pay an additional 2% surcharge on all residential properties costing more than £40,000. Where a property is a second property and costs more than £40,000, the rate will be 3% above the standard rates including the 2% surcharge. The tax is different if the property or land is situated in Scotland or Wales.

If a non-resident buys a property with a UK resident, the surcharge applies to the whole purchase not just to the portion of the purchase price attributable to the non-resident individual.

The definition of non-resident for SDLT purposes is different to the definition for other taxes. An individual is treated as non-resident for SDLT purposes if he/she is not present in the UK (including Scotland or Wales) for at least 183 days during the 12 months before the purchase date. However, if the individual is present in the UK for at least 183 days in any continuous 365 day period in the 2 years following the purchase then he/she can claim a refund of the 2% surcharge. This would cover someone who has returned or come to live in the UK having previously been abroad.

Stamp Duty Land Tax Rates for residential properties in England and Northern Ireland (Non-residents only) from 23rd September 2022

If you are purchasing an additional property higher rates of SDLT will apply. You will pay an additional 3% above the standard rates of SDLT where you already own a property. They do not apply to purchases of property under £40,000 or purchases of caravans, mobile homes and houseboats.

If you are considering purchasing a property we would strongly advise that you read these FAQ’s to find an answer to your particular situation. If you are still none the wiser, please, do NOT assume anything but get in touch and be certain of the SDLT position before you do anything.

The higher rate and the surcharge do not apply to the following:
1. The property is worth less than £40,000
2. The property has a mixture of residential and non-residential aspects (for example a shop and a flat above)

Transferring Property with an outstanding mortgage

Joint owners of a property may agree that just one of them will take over ownership of a property they originally bought together, including any outstanding mortgage. If the share of the outstanding mortgage that is being transferred plus any consideration is more than £40,000 there will be SDLT due on the proportion of the outstanding mortgage that belongs to the share of the property being transferred even when no money is being exchanged. The 3% additional SDLT rate is not applied when an individual is purchasing a property from their spouse/civil partner provided that both individuals are living together (they do not have to be living in the property that is being transferred).

There is no SDLT due on a gift of a property provided that no outstanding mortgage is taken over. If the mortgage is more than £40,000, there may be a SDLT charge.

Land Transaction Tax Rates for residential properties in Scotland and Wales

The relevant rates for the Scotland and Wales can be found at the following.

Scotland – Land and Buildings Transaction Tax – https://revenue.scot/taxes/land-buildings-transaction-tax

Wales – Land Transaction Tax – https://gov.wales/land-transaction-tax-calculator

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© Thandi Nicholls Ltd 2023 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, S Thandi or M S Bains cannot be held responsible for the consequences of any action or the consequences of deciding not to act.

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