Guidance

Stamp Duty Land Tax: relief for land or property transactions

Find out about the main reliefs available for Stamp Duty Land Tax (SDLT).

Overview

You do not pay SDLT if you buy a property in:

HMRC charge SDLT on property transactions in the UK where the value is more than certain thresholds, however some transactions qualify for reliefs that reduce the amount of tax you pay, or mean that you do not pay SDLT.

To claim relief fill in an SDLT return, even if you do not owe any tax. Enter the correct relief code from the drop down list at box ‘9’ of the return.

HMRC may charge you a penalty if you claim relief you’re not eligible for.

First Time Buyers’ Relief

If you, and anyone else you’re buying with, are first time buyers of a residential property you can claim relief on purchases:

  • made on or after 22 November 2017
  • where the purchase price is no more than £500,000

You will pay:

  • 0% on the first £300,000
  • 5% on the remainder up to £500,000

If the purchase price is more than £500,000 you cannot claim the relief and you must pay the standard rates on the total purchase price.

To claim First Time Buyers’ Relief, enter relief code ‘32’ in the SDLT return.

Find out more in the SDLT: relief for first time buyers - guidance note.

First time buyers of shared ownership properties

From 29 October 2018 the relief was extended to purchases of shared ownership property where the purchaser chooses to pay SDLT in stages.

If you’re a first time buyer of a shared ownership property you can claim relief on purchases made on or after 22 November 2017, when:

  • you intend to occupy the property as your main residence
  • the market value of the shared ownership property is £500,000 or less

You can claim the relief whether you make a market value election, or choose to pay SDLT in stages when the lease is granted.

The relief also applies to the rent payments, so you do not pay any SDLT on the rent.

If you bought your shared ownership property on or after the 22 November 2017 but before 29 October 2018 and paid SDLT, you can claim a refund of tax if you would have qualified for the relief.

Read chapter 6 of the SDLT: relief for first time buyers - guidance note to find out how.

SDLT relief for multiple dwellings

You can claim relief when you buy more than one dwelling where a transaction or a number of linked transactions include freehold or leasehold interests in more than one dwelling.

If you claim relief, to work out the rate of tax HMRC charge:

  • divide the total amount paid for the properties by the number of dwellings
  • work out the tax due on this figure
  • multiply this amount of tax by the number of dwellings

The minimum rate of tax under the relief is 1% of the amount paid for the dwellings.

Find out more in the HMRC SDLT manual.

Example

You buy 5 houses for £1 million.

£1 million divided by 5 is £200,000.

The amount of SDLT you pay on £200,000 is £1,500 (0% of £125,000 + 2% of £75,000).

£1,500 multiplied by 5 is £7,500.

As this is less than 1% of £1 million (which is £10,000), the amount of tax you pay is £10,000.

Higher rates of SDLT may be charged from 1 April 2016 on purchases of additional residential properties.

When multiple dwellings relief does not apply

The relief does not apply to the transfer of a freehold reversion or headlease where a dwelling has a long lease of 21 years or more.

The rate of tax HMRC charge for this sort of freehold reversion or headlease, or for any non-residential property included in the transaction, is the usual rate without any relief.

You may need to fill in another return and recalculate the tax due if the number of dwellings is reduced within 3 years of the transaction. For example, if you combine 2 flats into 1.

To claim, enter relief code ‘33’ on your return.

Building company buys an individual’s home

If a building company or property trader buys a home from someone who is buying a new home from them, the property bought by the house builder or property trader is exempt from SDLT if certain conditions are met.

The area of land that the building company or property trader buys along with the old home must not go above certain limits (normally 0.5 hectares) and the person selling the home must:

  • have lived in the property as their main or only home at some time during the 2 years before the building company or property trader bought it
  • buy a new home from the house building company
  • intend to live in the new property as their main or only home

This relief does not apply to individuals who swap houses.

To claim this relief enter code ‘08’ in the SDLT return.

Find out more in the HMRC SDLT manual.

Employer buys employee’s house

If an employer or property trader buys an individual’s house because they’re moving with their work, the purchase is exempt from SDLT if certain conditions are met.

You must meet all the conditions to qualify for this relief, these are the:

  • employee lived in the house as their main or only home at some time during the 2 years before their employer bought it
  • employer or property trader is buying the house because the employee must move as a result of a job relocation
  • price the employer or property trader pays is not more than the market value of the property
  • area of land the employer or property trader buys is within certain limits - normally 0.5 hectares

To claim relief when an employer buys an employee’s house enter relief code ‘09’ in the SDLT return.

Find out more in the HMRC SDLT manual.

Compulsory purchases

Sometimes a local authority agrees to make a Compulsory Purchase Order on a property so that a development by another party, for example a property developer, can go ahead. The owner of the property sells it to the local authority and the local authority sells it to the property developer.

As there are 2 sales, there’d normally be 2 amounts of SDLT to pay. However, if the property developer is doing the development, the local authority can get relief from SDLT when it buys the property.

A body that has the legal power to compulsorily buy land or property can claim this relief. They can still claim even if the sale is not made under those powers, as long as the sale allows development by a third party.

Enter relief code ‘10’ in the SDLT return to claim .relief for a transaction involving a compulsory purchase.

Find out more in the HMRC SDLT manual.

Property developer subject to planning obligations

As a condition of giving planning permission to a developer, a planning authority might ask the developer to provide amenities for the community, for example a school. These are known as ‘planning obligations’.

Usually the developer transfers the building to the local authority to run once it’s finished. However, there may be 2 successive charges of SDLT if the developer buys the land from its original owner and then transfers the finished building to the local authority.

The developer can claim the relief so that they do not pay SDLT on the first sale.

To claim relief for complying with planning obligations, enter relief code ‘11’ in the SDLT return.

Find out more in the HMRC SDLT manual.

Transfer of property between companies

Companies can claim relief within the same group that buy or sell property to or from each other. The buyer of the property can claim the relief if:

  • the buyer and seller are both companies
  • at the effective date of the transaction both companies are members of the same group

Certain conditions and restrictions apply to SDLT Group Relief.

To claim it, enter relief code ‘12’ in the SDLT return.

Find out more in the HMRC SDLT manual.

Relief for charities

As long as certain conditions are met, charities can get relief from SDLT when they buy land and property for charitable purposes.

A charity can claim some relief when they buy land and property jointly (as tenants in common) with a non-charity buyer. The charity claims relief on its share of the property.

HMRC can withdraw the relief if, within 3 years of the transaction, if the charity still owns the property, and either:

  • stops being a charity
  • uses the property for purposes that are not charitable

Enter relief code ‘20’ in the SDLT return to claim SDLT charities relief.

Find out more in the HMRC SDLT manual.

Right to Buy properties

A Right to Buy transaction is the sale of a dwelling either:

  • at a discount by a public sector body like a local housing authority
  • when there’s a preserved right to buy

In both cases, this covers the grant of a lease of a dwelling.

The SDLT is worked out on the discounted price the buyer pays. It does not include any additional payments which may become due, for example if the buyer sells before a certain period has elapsed.

To claim relief for right to buy transactions, enter relief code ‘22’ in the SDLT return.

Find out more in the HMRC SDLT manual.

Registered social landlords

If a registered social landlord buys land and property they can claim relief from SDLT if either:

  • most of the board members of the registered social landlord are tenants living in properties from the social landlord
  • the seller of the property is a ‘qualifying body’, for example a local council
  • a public subsidy funds the sale

Enter relief code ‘23’ in the return to claim registered social landlords relief.

Find out more in the HMRC SDLT manual.

Other reliefs

There are other less common reliefs from SDLT you can claim in certain circumstances, for example reconstruction or acquisition relief.

Find out more about these reliefs in the SDLT manual.

Published 6 May 2014
Last updated 13 December 2018 + show all updates
  1. Information about first time buyers of shared ownership properties has been added.
  2. From 1 April 2018 SDLT will no longer apply in Wales. You'll pay Land Transaction Tax which is dealt with by the Welsh Revenue Authority.
  3. Information about First Time Buyers Relief has been added to this page.
  4. First published.