Stamp Taxes
Stamp taxes can be complex, with key differences between the three main taxes being Stamp Duty, Stamp Duty Land Tax (SDLT), and Stamp Duty Reserve Tax (SDRT).
At Stratos, we provide expert guidance to help you understand and manage your obligations, whether you’re purchasing property, transferring shares, or handling corporate transactions.
Our team ensures you’re not only compliant but also making the most of available reliefs and exemptions, helping you reduce risk and avoid costly mistakes.
Stamp Duty Land Tax (“SDLT”)
SDLT is payable on the purchase of land or property in England and Northern Wales. Whether you’re a first time buyer, property investor or business acquiring commercial property, understanding the SDLT implications of the transaction is very important.
SDLT rates vary depending on the type of property i.e. residential or commercial, the purchase price and your buyer status i.e. individual, company or additional property owner.
- 5% Surcharge: Companies and individuals with interests in multiple residential properties may face an extra 5% SDLT surcharge.
- 2% Surcharge: Non-UK Residents must pay an additional 2% charge when purchasing UK residential property.
Residential vs Commercial: SDLT rates differ for residential and commercial properties.
Mixed-Use Properties: These are typically taxed at the (lower) commercial rates.
The tax is paid by the buyer and must be reported to HMRC within 14 days of completion. The return should include (among other things) the details of the property(ies) involved, details of the buyer(s) and their agent, details of the vendor(s) and their agent, and the SDLT due.
From 1 April 2025, the SDLT residential rates (before surcharges) are as follows:
| Property Value | SDLT Rate |
|---|---|
| Up to £125,000 | 0% |
| From £125,001 to £250,000 | 2% |
| From £250,001 to £925,000 | 5%> |
| From £925,001 to £1.5m | 10% |
| Above £1.5m | 12% |
The non-residential rates by comparison are much lower and as follows:
| Property Value | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| From £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
Stamp Duty (“SD”)
SD is levied on certain legal documents, most commonly those that transfer shares or securities. The liability is payable by the purchaser of the shares/securities.
SD only applies if the documents were signed in the UK or, if signed outside the UK, they relate to property in the UK.
The standard rate of SD is 0.5% (rounded to the nearest £5) but it is not payable when the consideration for the shares/securities is less than £1,000.
Note that in rare occasions, the rate of SD may be 1.5% for certain depositary receipt schemes or clearance services.
SD should be paid within 30 days of the transfer documents being signed. Late payment can result in penalties and interest.
Stamp Duty Reserve Tax (“SDRT”)
SDRT catches certain transactions that are outside the scope of SD.
SDRT is levied on an agreement to transfer chargeable securities, such as uncertified shares in electronic systems such as CREST or shares which do not require an instrument or document to complete the transaction.
The rate of SDRT is generally 0.5%, but certain transactions may attract a rate of 1.5%. Note that, unlike SD rates, SDRT is rounded to the nearest penny.
Unlike SD, which applies to documents, SDRT is charged on the agreement itself, making it especially relevant for modern, paperless share transactions.
Why Stratos?
Navigating the complexities of Stamp Duty, Stamp Duty Land Tax (SDLT), and Stamp Duty Reserve Tax (SDRT) requires more than just a basic understanding of the rules, it needs precise, tailored guidance.
At Stratos our team has deep experience advising on all types of stamp taxes, from residential and commercial property transactions to complex share transfers and corporate restructuring.
We can break down the rules into straightforward guidance you can act on, helping you understand your obligations and ensure that you are paying the right and fair amount of tax. Where available, we identify and apply relevant reliefs or exemptions, so you don’t miss out on valuable savings.
We also work closely with your legal advisers and conveyancers to ensure that the correct treatment and claims are properly submitted to HMRC, avoiding delays, penalties, or compliance issues.
FAQs
The most common relief is known as First-Time Buyers’ Relief. Essentially, if the property is your first property purchase and is worth £500k or less, the first £300k is exempt from SDLT and the balance up to £500k is taxed at 5%.
Another beneficial relief (especially now multiple dwellings relief has been abolished) is that HMRC treat the purchase of 6 or more residential properties in one transaction as having a commercial flavour and, for SDLT purposes, the properties are taxed via the more beneficial non-residential rates.
For corporates, if transferring property within a group, group relief in Sch. 7, FA 2003 may be available to reduce the SDLT bill to nil.
Note that there is a myriad of reliefs, and the reliefs listed above are not exhaustive, they are merely the more common reliefs that will be seen in practice. As such, it is important to seek professional advice when purchasing property in order to see if you can mitigate your SDLT bill.
When you purchase the initial portion of the house you will be required to submit a SDLT return and pay SDLT on the portion.
Until you “staircase” over 80% ownership, you will not be required to submit another return or pay further SDLT.
However, careful consideration should be given in these matters as the SDLT calculations can be complicated.
One consideration that should always be taken when entering into a shared ownership scheme is whether a market value election is worthwhile. The election allows you to pay SDLT based on the full market value of the property at the time of purchase of the initial portion.
The surcharges are all to do with residential property only.
The key surcharges are:
1) 5% – if you own another residential property at the time of purchase.
2) 2% – purchase of UK property as a non-UK resident.
3) 17% – purchase of a property worth in excess of £500k by a non-natural person (company etc).
4) 5% – purchase by a company (if the 17% surcharge does not apply).
Note that relief from the 5% surcharge for owning more than one residential property can be obtained if you are buying this property to replace your main residence. There are various conditions for this to apply and also a 3-year window to sell your old home which can only be extended in exceptional circumstances.
Moreover, relief from the 17% surcharge is available in various situations – most commonly when the property is used in a property rental business. However, there are many exemptions from the 17% surcharge each with their own conditions and even exceptions to some of the exemptions. As such, specialist advice should be sought.
Quite simply, mixed-use property is property which includes both residential and non-residential property. It can benefit you as, if property is mixed-use, it is subject to the more beneficial non-residential SDLT rates.
There is no rulebook which determines whether a property is mixed-use and, therefore, this can be a grey area of tax legislation, and so we recommend that advice is sought to determine the SDLT status of the property prior to completion.
Common cases involve:
- Country houses with large paddocks or grazing land included in the sale,
- Offices with residential flats connected, or
- Agricultural properties/land.
There are various reliefs from SD. The most common is simply that no SD is payable if the shares were given for consideration of £1,000 or less.
SD is not charged on unlisted shares and securities sold on recognised growth markets such as AIM. It is also not payable on an issue of new shares.
In addition, if the shares are transferred between companies in a group, it is likely that group relief under s. 42, FA 1930 will apply to reduce the SD bill to nil.
Moreover, if a share for share exchange occurs where a part or the whole of a company’s share capital is acquired and there are mirror shareholdings before and after, it is likely that relief under s. 75 or s, 77, FA 1986 (respectively) will apply to reduce the SD bill to nil.
The above list is not exhaustive and only covers the more commonly seen exemptions. Professional advice should be sought if you wish to understand your options in mitigating your SD bill.
If there is no consideration (or less than £1,000) given for the gift, then there is no SD.
Note that transfers between spouses/civil partners (regardless of consideration) are exempt from SD.
The deadline for paying SD if no later than 30 days after the stock transfer documents have been dated and signed.
The payment will need to include a payment reference and be made to the HMRC Birmingham Stamp Office, and you will need to email your SD notification to HMRC also.
Please see Pay Stamp Duty on shares – GOV.UK for more information.
Note that, usually, your lawyer or broker will handle the SD payments.
As with Stamp Duty (SD), no Stamp Duty Reserve Tax (SDRT) is payable where shares are transferred for no consideration, whether in money or money’s worth.
Transfers between spouses or civil partners are also exempt from SDRT, regardless of whether consideration is given. In addition, SDRT does not usually apply to the transfer of loan capital or to sales involving intermediaries. There are also specific exemptions for share repurchases and stock lending arrangements, provided certain conditions are met.
Where a transaction falls within the scope of both SD and SDRT, and a Stamp Duty relief applies, any associated SDRT charge will normally be cancelled.
This list is not exhaustive, and the availability of reliefs will depend on the specific circumstances. Professional advice should always be sought to ensure SDLT exposure is correctly identified and to explore opportunities to reduce any SDRT liability.
If this is the case, you should only be charged once.
Essentially, if SD is paid or a SD relief or exemption applies then the SDRT charge will be cancelled. See the above section of SD reliefs.
SDRT is paid via the CREST system or outside of CREST (off market).
CREST automatically deducts SDRT from chargeable trade and pays HMRC, so no manual payment or notice is required.
However, if the transaction is off market, you will need to send HMRC a written notice including:
- The buyer and seller details.
- What and how many securities have been transferred.
- Any relief or exemption, or both, claimed.
- Details of the payment or other exchange, including monetary value, made.
- A reference number, chosen by you, so HMRC can identify the payment.
The deadline is the seventh day of the month after the month in which the agreement took place or became unconditional.
See Pay Stamp Duty Reserve Tax – GOV.UK for more information.
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Daniel Hill
Tax Consultant
Dan graduated from the University of York in 2023 with a master’s degree in mathematics. Shortly thereafter, Dan joined the team as a Tax Associate, has recently completed his ATT examinations, and is progressing towards being CTA qualified.
