SDLT is payable by the purchaser in a land transaction.
A transaction will trigger liability if it involves the acquisition of an interest in land in the United Kingdom. This will include a simple conveyance of land such as buying a house, creating a lease or assigning a lease.
The tax has to be paid when a contract has been substantially performed. In cases where the purchaser takes possession of the property on completion that will be the date. However, if the purchaser effectively takes possession before completion – known as 'resting on contract' – that will be regarded as triggering the tax.
You are planning to buy a house which will cost £350,000. The SDLT which you will have to pay will be at 3%. The tax will be £10,500.
If the house costs £550,000, the SDLT will be £22,000.
There is a relief available for purchasers of residential property who acquire interests in more than one dwelling. Where the relief is claimed the rate of SDLT is determined not by the aggregate consideration but instead by the mean consideration (ie by the aggregate consideration divided by the number of dwellings) subject to a minimum rate of 1%.
Tax is chargeable on the consideration. This will usually be the actual cash that passes on the sale. However the definition is very wide and is intended to catch all sorts of situations where value might be given other than in cash. For example if the purchaser agrees to do certain work on the property.
If a lease is created for the payment of a premium ie a lump sum in addition to any rent, then the amount of the premium is the consideration subject to SDLT.
Where there is no premium there is still a potential charge to SDLT which has to be calculated. The calculation has to take account of all the rent that will be paid under the lease subject to a discount. If the calculated value exceeds £125,000 for residential property and £150,000 for non-residential, the excess is charged at 1%.
The purchaser must complete an SDLT 1 return and this must be submitted to a special HMRC office within 30 days of the transaction. You must also send a cheque for the tax at the same time so this means that you have to calculate the tax due. A late return triggers an automatic penalty of £100, and late payment of the tax will mean a charge to interest.