Shared ownership property

You may have to pay Stamp Duty Land Tax (SDLT) when you buy a property through a shared ownership scheme run by an approved public body.

This includes:

  • local housing authorities
  • housing associations
  • housing action trusts
  • the Northern Ireland Housing Executive
  • the Commission for the New Towns
  • development corporations

You can choose to either:

  • make a one-off payment based on the market value of the property (‘market value election’)
  • pay SDLT in stages

Market value election

Submit a return and pay SDLT at the residential rate. Use the total market value of the property to calculate how much to pay - even if you’re only buying a share.

You do not pay any more SDLT after this, even if you buy a bigger share in the property later on.

Example

You pay £70,000 to buy a 50% share of a property with a market value of £140,000.

If you buy your share:

  • between 8 July 2020 and 30 September 2021, there’s no SDLT to pay
  • from 1 October 2021 you have to pay SDLT of £300 (0% on £125,000 and 2% on £15,000)

If you’re a first-time buyer and buying your first share on or after 1 July 2021, you may also be eligible to get a discount (relief) that means you’ll pay less or no tax.

HM Revenue and Customs (HMRC) has guidance on SDLT if you do not have the right to the freehold.

Paying in stages

You make your first SDLT payment on the price you pay for the lease (the ‘lease premium’) if it’s above the SDLT threshold. If the lease premium is below the threshold, you do not pay SDLT at this point - but you still have to submit a return.

You may have to pay extra SDLT if the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold.

Work this out on HMRC’s SDLT calculator. You pay SDLT of 1% on the amount over the threshold - add this to any SDLT you’re paying on the lease premium.

SDLT if you buy more shares

If you buy any more shares in the property, you do not have to pay any more SDLT or send a return to HMRC until you own more than an 80% share.

Once your share of the property goes over 80% you must send a return and pay SDLT on:

  • the transaction that took you over 80%
  • any transactions after that

Calculating your SDLT

To work out the SDLT if you buy more shares that take you over 80%:

  1. Work out the SDLT due on the total you’ve paid for the property to date - include any amounts you did not pay tax on. Use the SDLT rate that applies at the time you bought the new share. For example, if your total purchases before 8 July 2020 were £160,000, the SDLT due would be £700.

  2. Divide the amount you’re paying for this share by the total amount you’ve paid for the property to date. For example, if you’re paying £40,000 for this share, divide £40,000 by £160,000 = 0.25.

  3. Multiply the two figures, for example SDLT of £700 multiplied by 0.25 = £175. This is the amount you would need to pay in SDLT for this share.

If you’ve paid less than £500,000 for your property between 8 July 2020 and 30 June 2021, or less than £250,000 between 1 July 2021 and 30 September 2021, the amount of SDLT you’d need to pay on any additional shares would be zero. This is because of the temporary SDLT rate.

Additional tax if payments are linked

You may have to pay extra SDLT on previous shares if they become ‘linked’ to later shares. Shares only become linked once you own over 80% of the property.

You can read more about paying SDLT when you buy more shares.