UK land taxes were something of a minefield in 2021 as a result of the pandemic. But 1 October saw a return to ‘business as usual’, so here’s an outline of the changes that took place, along with a reminder of how the tax is charged
What’s the latest?
On 1 October 2021, the ‘nil rate band’ for Stamp Duty Land Tax in England and Northern Ireland fell from £250,000 to its pre-pandemic level of £125,000. This follows the previous tapering down from £500,000 to £250,000 on 1 July 2021.
In Wales, the Land Transaction Tax nil rate band has already reverted to its standard level of £180,000 (on 1 July). Until then, it stood at £250,000.
Scotland’s Land and Buildings Transaction Tax reverted to its standard level of £145,000 in April.
Full details of UK land taxes – past, present and future – can be found below.
Property tax around the UK
If you buy residential property or land in the UK you must account for the associated tax in the particular country.
- In England and Northern Ireland the tax is Stamp Duty Land Tax (SDLT)
- In Scotland, it is the Land and Buildings Transaction Tax (LBTT)
- In Wales it is the Land Transaction Tax (LTT)
Payment of the tax is due unless the value of the transaction is within the nil rate band. Your solicitor will tell you when and how to pay any tax you owe.
These taxes are liable on freehold and leasehold (new or existing) purchases, purchases through a shared ownership scheme, and other property transfers made in exchange for payment.
Note that if you are buying an additional property beyond your main residence, such as a buy-to-let property, higher rates of tax apply. Details below.
In England and Northern Ireland, and in Scotland, tax relief is available to first-time buyers. Details below.
What are the starting tax thresholds?
All three taxes have seen changes during the pandemic, with the thresholds at which tax becomes payable being raised temporarily, effectively increasing the nil-rate band.
For England and Northern Ireland’s Stamp Duty Land Tax, the threshold was raised from its usual level of £125,000 to £500,000 in July 2020.
This reduced to £250,000 from 1 July 2021.
Now, from 1 October, its starting point is £125,000 once more.
For Scotland’s Land and Buildings Transaction Tax, the threshold was increased to £250,000 in July 2020. It reverted to £145,000 from 1 April 2021.
For Wales’ Land Transaction Tax, the threshold was raised from £180,000 to £250,000 in July 2020. It returned to £180,000 from 1 July 2021.
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Applicable tax rates on residential purchases
England & N Ireland Stamp Duty Land Tax: Rates until 30 June 2021
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £500,000 | Zero |
| The next £425,000 (the portion from £500,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Rates from 1 July to 30 September 2021
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Rates from 1 October 2021
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £125,000 | Zero |
| The next £125,000 (the portion from £125,001 to £250,000) | 2% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
If you’re buying your first home
You can claim a discount (relief) if you buy your first home from 1 July 2021. This means you’ll pay:
- no SDLT up to £300,000
- 5% SDLT on the portion from £300,001 to £500,000
You’re eligible if you and anyone else you’re buying with are first-time buyers.
If the price is over £500,000, you follow the rules for people who’ve bought a home before.
Additional property purchases
Those buying additional properties must normally pay a 3% surcharge on top of the stated rates of SDLT. For additional properties in the nil rate band, the effective rate will be 3%.
Someone buying a property as their main residence will have to pay the surcharge if they have not sold their previous property on the day of completing the purchase.
From 1 October 2021, the following rates apply:
| Property or lease premium or transfer value | SDLT surcharge rate |
|---|---|
| Up to £125,000 | 3% |
| The next £125,000 (the portion from £125,001 to £250,000) | 5% |
| The next £675,000 (the portion from £250,001 to £925,000) | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
| The remaining amount (the portion above £1.5 million) | 15% |
Scotland Land and Buildings Transaction Tax rates from 1 April 2021
| Purchase price | LBTT rate |
|---|---|
| Up to £145,000 | 0% |
| £145,001 to £250,000 | 2% |
| £250,001 to £325,000 | 5% |
| £325,001 to £750,000 | 10% |
| Over £750,000 | 12% |
If you’re buying your first home
Additional relief for first-time buyers means their tax threshold stands at £175,000, effectively saving them £600.
Additional property purchases
An Additional Dwelling Supplement of 4% is payable on the total purchase price of an additional dwelling of £40,000 or more:
| Price threshold | LBTT surcharge rate |
|---|---|
| The portion up to and including £145,000 | 4% |
| The portion over £145,000 up to and including £250,000 | 6% |
| The portion over £250,000 up to and including £325,000 | 9% |
| The portion over £325,000 up to and including £750,000 | 14% |
| The portion over £750,000 | 16% |
Wales: Land Transaction Tax rates until 30 June
| Price threshold | LTT rate |
|---|---|
| The portion up to and including £250,000 | 0% |
| The portion over £250,000 up to and including £400,000 | 5% |
| The portion over £400,000 up to and including £750,000 | 7.5% |
| The portion over £750,000 up to and including £1,500,000 | 10% |
| The portion over £1,500,000 | 12% |
Rates from 1 July
| Price threshold | LTT rate |
|---|---|
| The portion up to and including £180,000 | 0% |
| The portion over £180,000 up to and including £250,000 | 3.5% |
| The portion over £250,000 up to and including £400,000 | 5% |
| The portion over £400,000 up to and including £750,000 | 7.5% |
| The portion over £750,000 up to and including £1,500,000 | 10% |
| The portion over £1,500,000 | 12% |
Additional property purchases
An additional higher residential tax rate of 4% is payable on the total purchase price. These are the rates that apply from 1 July 2021:
| Price threshold | LTT rate |
|---|---|
| The portion up to and including £180,000 | 4% |
| The portion over £180,000 up to and including £250,000 | 7.5% |
| The portion over £250,000 up to and including £400,000 | 9% |
| The portion over £400,000 up to and including £750,000 | 11.5% |
| The portion over £750,000 up to and including £1,500,000 | 14% |
| The portion over £1,500,000 | 16% |
Free Mortgage Advice
Trussle is a 5-star Trustpilot rated online mortgage adviser that can help you find the right mortgage - and do all the hard work with the lender to secure it. *Your home may be repossessed if you do not keep up repayments on your mortgage.
