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HMRC internal manual

# SDLT - higher rates for additional dwellings - what the higher rates are and what they apply to

## Higher rates

Where applicable, the higher rates will be 3% above the standard rates of SDLT that apply to purchases of residential property.  Each rate will apply to the portion of the consideration that falls within each rate band [Para 1(2)]:

 ### Purchase price of property ### Rate paid on portion of price within each band Up to £125,000 3% Over £125,000 and up to £250,000 5% Over £250,000 and up to £925,000 8% Over £925,000 and up to £1,500,000 13% Over £1,500,000 15%

For example, the SDLT due on a purchase of buy-to-let property for £300,000 that is liable to the higher rates would be £14,000, calculated as follows:

 #### Charge #### SDLT due 3% on the first £125,000 = £3,750 5% on the next £125,000 = £6,250 8% on the final £50,000 = £4,000 ## Higher rates

Where applicable, the higher rates will be 3% above the standard rates of SDLT that apply to purchases of residential property.  Each rate will apply to the portion of the consideration that falls within each rate band [Para 1(2)]:

 ### Purchase price of property ### Rate paid on portion of price within each band Up to £125,000 3% Over £125,000 and up to £250,000 5% Over £250,000 and up to £925,000 8% Over £925,000 and up to £1,500,000 13% Over £1,500,000 15%

For example, the SDLT due on a purchase of buy-to-let property for £300,000 that is liable to the higher rates would be £14,000, calculated as follows:

 #### £14,000

Where applicable, the higher rates will apply to purchases of major interests in one or more dwellings [Paras 3(1) (b), 4(b), 5(1) (b), 6(1) (b) and 7(b)].

For the purposes of the higher rates a major interest does not include a leasehold interest if the lease was originally granted for a period of 7 years or less [Para 2(4)].

#### Example

A leasehold interest originally granted for 100 years but with only four years left to expiry will be treated as a major interest in land for the purposes of the higher rates’ rules.

A leasehold interest originally granted for four years with all four years left to run will not be treated as a major interest in land for the purposes of the higher rates’ rules.

For the purposes of the higher rates a dwelling is defined [Para 18] as a building or part of a building that is –

• used or suitable for use as a single dwelling, or
• in the process of being constructed or adapted for use as a dwelling.

The gardens and grounds of the dwelling or land that is to be enjoyed with the dwelling (including buildings), for example, a detached garage, are taken to be part of the dwelling, but a transaction in such a building or land without the purchase of the actual dwelling will not be liable to the higher rates.

#### Example

An individual buys a plot of garden land from their neighbour.  The purchase does not include an interest in one or more dwellings.  The higher rates will not apply.

`Para` references are to paragraphs in Schedule 4ZA of the Finance Act 2003.