Guidance: Stamp Duty Land Tax relief for land or property transactions

Overview

HMRC charges Stamp Duty Land Tax on property transactions in the UK where the value is more than certain thresholds, however some transactions qualify for reliefs that reduce the amount of tax you pay, or mean that you do not pay Stamp Duty Land Tax.

To claim relief fill in an Stamp Duty Land Tax return, even if you do not owe any tax. Enter the correct relief code from the drop down list at box ‘9’ of the return.

HMRC might charge you a penalty if you claim relief you’re not eligible for.

First Time Buyers’ Relief

If you, and anyone else you’re buying with, are first time buyers of a residential property, you can claim relief if the purchase price is no more than £625,000.

You’ll pay:

• 0% on the first £425,000
• 5% on the remainder up to £625,000

If the purchase price is more than £625,000, you cannot claim the relief and you must pay the standard rates on the total purchase price. Find out more about residential property rates for Stamp Duty Land Tax.

If you purchased your first home before 23 September 2022, different relief rates for first time buyers apply.

To claim First Time Buyers’ Relief, enter relief code ‘32’ in the Stamp Duty Land Tax return.

Find out more in the Stamp Duty Land Tax: relief for first time buyers – guidance note.

First time buyers of shared ownership properties

If you’re a first time buyer of a shared ownership property, you can claim relief, when:

• you intend to occupy the property as your main residence
• the market value of the shared ownership property is £625,000 or less

If you purchased your shared ownership property before 23 September 2022, different relief rates for first time buyers apply.

You can claim the relief if you make a market value election, or if you choose to pay Stamp Duty Land Tax in stages when the lease is granted.

The relief also applies to the rent payments, so you do not pay any Stamp Duty Land Tax on the rent.

From 29 October 2018, the relief was extended to include purchases of shared ownership property when the purchaser chooses to pay Stamp Duty Land Tax in stages.

Further guidance on relief for first time buyers (including for shared ownership) can be found within the Stamp Duty Land Tax: relief for first time buyers — guidance note.

Stamp Duty Land Tax relief for multiple dwellings

You can claim relief when you buy more than one dwelling if a transaction (or a number of linked transactions) include freehold or leasehold interests in more than one dwelling.

If you claim relief, to work out the rate of tax HMRC charge:

• divide the total amount paid for the properties by the number of dwellings
• work out the tax due on this figure
• multiply this amount of tax by the number of dwellings

The minimum rate of tax under the relief is 1% of the amount paid for the dwellings.

Find out more in the HMRC Stamp Duty Land Tax manual.

Example

You buy 4 houses for £1 million.

£1 million divided by 4 is £250,000.

You will therefore not pay Stamp Duty Land Tax on £250,000 (0% of £250,000). However, as the minimum rate of tax under the relief is 1% of the amount paid for the dwellings, the amount of you will pay is £10,000.

Higher rates of Stamp Duty Land Tax might be charged from 1 April 2016 on purchases of additional residential properties.

When multiple dwellings relief does not apply

The relief does not apply to the transfer of a freehold reversion or headlease where a dwelling has a long lease of 21 years or more.

The rate of tax HMRC charges for this sort of freehold reversion or headlease, or for any non-residential property included in the transaction, is the usual rate without any relief.

You might need to fill in another return and recalculate the tax due if the number of dwellings is reduced within 3 years of the transaction. For example, if you combine 2 flats into 1.

To claim, enter relief code ‘33’ on your return.

Building company buys an individual’s home

If a building company or property trader buys a home from someone who is buying a new home from them, the property bought by the house builder or property trader is exempt from Stamp Duty Land Tax if certain conditions are met.

The area of land that the building company or property trader buys along with the old home must not go above certain limits (normally 0.5 hectares) and the person selling the home must:

• have lived in the property as their main or only home at some time during the 2 years before the building company or property trader bought it
• buy a new home from the house building company
• intend to live in the new property as their main or only home

This relief does not apply to individuals who swap houses.

To claim this relief enter code ‘08’ in the Stamp Duty Land Tax return.

Find out more in the HMRC Stamp Duty Land Tax manual.

Employer buys employee’s house

If an employer or property trader buys an individual’s house because they’re moving with their work, the purchase is exempt from Stamp Duty Land Tax if certain conditions are met.

You must meet all the conditions to qualify for this relief, these are the:

• employee lived in the house as their main or only home at some time during the 2 years before their employer bought it
• employer or property trader is buying the house because the employee must move as a result of a job relocation
• price the employer or property trader pays is not more than the market value of the property
• area of land the employer or property trader buys is within certain limits – normally 0.5 hectares

To claim relief when an employer buys an employee’s house enter relief code ‘09’ in the Stamp Duty Land Tax return.

Find out more in the HMRC Stamp Duty Land Tax manual.

Compulsory purchases

Sometimes a local authority agrees to make a Compulsory Purchase Order on a property so that a development by another party, for example a property developer, can go ahead. The owner of the property sells it to the local authority and the local authority sells it to the property developer.

As there are 2 sales, there would normally be 2 amounts of Stamp Duty Land Tax to pay. However, if the property developer is doing the development, the local authority can get relief from Stamp Duty Land Tax when it buys the property.

A body that has the legal power to compulsorily buy land or property can claim this relief. They can still claim even if the sale is not made under those powers, as long as the sale allows development by a third party.

Enter relief code ‘10’ in the Stamp Duty Land Tax return to claim relief for a transaction involving a compulsory purchase.

Find out more in the HMRC Stamp Duty Land Tax manual.

Property developer subject to planning obligations

As a condition of giving planning permission to a developer, a planning authority might ask the developer to provide amenities for the community, for example a school. These are known as ‘planning obligations’.

Usually the developer transfers the building to the local authority to run once it’s finished. However, there might be 2 successive charges of Stamp Duty Land Tax if the developer buys the land from its original owner and then transfers the finished building to the local authority.

The developer can claim the relief so that they do not pay Stamp Duty Land Taxon the first sale.

To claim relief for complying with planning obligations, enter relief code ‘11’ in the Stamp Duty Land Tax return.

Find out more in the HMRC Stamp Duty Land Tax manual.

Transfer of property between companies

Companies can claim relief within the same group that buy or sell property to or from each other. The buyer of the property can claim the relief if:

• the buyer and seller are both companies
• at the effective date of the transaction both companies are members of the same group

Certain conditions and restrictions apply to Stamp Duty Land Tax Group Relief.

To claim it, enter relief code ‘12’ in the Stamp Duty Land Tax return.

Find out more in the HMRC Stamp Duty Land Tax manual.

Seeding relief for Property Authorised Investment Funds or Co-Ownership Authorised Contractual Schemes

You can get seeding relief on Stamp Duty Land Tax if you’re in an investment scheme such as a Property Authorised Investment Fund (PAIF) or a Co-ownership Authorised Contractual Scheme (CoACS) and purchase land in England or Northern Ireland in exchange for units in the scheme.

You must submit an Stamp Duty Land Tax return using ‘Code 28’ for question 9 of the return to receive seeding relief. The return must be sent to HMRC with a written notice stating that a claim for seeding relief has been made.

For PAIF seeding relief the notice must contain:

• the name of the purchaser
• confirmation that the return contains a claim for seeding relief
• confirmation that the purchaser is a PAIF or a company treated as a PAIF
• the Unique Tax Payer Reference Number (UTRN) of the Stamp Duty Land Tax return that the claim was made on

For CoACS seeding relief the notice must contain:

• the name of the purchaser
• confirmation that the return contains a claim for seeding relief
• confirmation that the purchaser is a CoACS, or an entity treated as a CoACS
• the Unique Tax Payer Reference Number of the Stamp Duty Land Tax return that the claim was made on

Send your Stamp Duty Land Tax return and notice to:

Relief for charities

As long as certain conditions are met, charities can get relief from Stamp Duty Land Tax when they buy land and property for charitable purposes.

A charity can claim some relief when they buy land and property jointly (as tenants in common) with a non-charity buyer. The charity claims relief on its share of the property.

HMRC can withdraw the relief if, within 3 years of the transaction, if the charity still owns the property, and either:

• stops being a charity
• uses the property for purposes that are not charitable

Enter relief code ‘20’ in the Stamp Duty Land Tax return to claim Stamp Duty Land Tax charities relief.

Find out more in the HMRC Stamp Duty Land Tax manual.

Right to Buy properties

A Right to Buy transaction is the sale of a dwelling either:

• at a discount by a public sector body like a local housing authority
• when there’s a preserved right to buy

In both cases, this covers the grant of a lease of a dwelling.

The Stamp Duty Land Tax is worked out on the discounted price the buyer pays. It does not include any additional payments which may become due, for example if the buyer sells before a certain period has elapsed.

To claim relief for right to buy transactions, enter relief code ‘22’ in the Stamp Duty Land Tax return.

Find out more in the HMRC Stamp Duty Land Tax manual.

Relevant housing providers

If a relevant housing provider buys land and property they can claim relief from Stamp Duty Land Tax if either:

• most of the board members of the relevant housing provider are tenants living in properties owned or managed by the provider
• the seller of the property is a ‘qualifying body’, for example a local council
• a public subsidy funds the purchase by the relevant housing provider

Enter relief code ‘23’ in the return to claim the relief.

Find out more in the HMRC Stamp Duty Land Tax manual.

Crown employees

You’ll usually have to pay 2% surcharge on top of Stamp Duty Land Tax rates if you’re a non-UK resident buying a residential property in England or Northern Ireland on or after 1 April 2021.

Relief from the 2% surcharge is available if you’re non-UK resident as a result of performing duties for the purposes of your employment under the Crown. This relief is also extended to the spouse or civil partner of a Crown servant, provided they are not separated.

The relief must be claimed at question 52 of the SDLT1 return. Find out more about how to complete your Stamp Duty Land Tax SDLT1 paper return.

Find out more information on the rates for non-UK residents and Crown Employment Relief.

Freeport tax sites

You can claim relief from Stamp Duty Land Tax when buying any land or buildings in a designated Freeport tax site if the land or buildings will be used in a qualifying way.

Find out more information about relief from Stamp Duty Land Tax in Freeport tax sites.

Other reliefs

There are other less common reliefs from Stamp Duty Land Tax you can claim in certain circumstances, for example reconstruction or acquisition relief.

Find out more about these reliefs in the Stamp Duty Land Tax manual.