Licking The UK Stamp Duty Muddle For Expats

It’s easy to get in a muddle as an expat or foreign buyer seeking to take advantage of some great buy-to-let investment deals in the UK.

The returns are good because a poor exchange rate between Sterling and most leading currencies offers an effective discount on the price of a home.

But the price paid to the seller hides how much the buyer pays as stamp duty – a purchase tax charged on property in the UK.

The calculation is due to become even more complicated as devolved assemblies in Scotland and Wales set their own rate of tax.

The rule is that if a buyer in the UK owns another property anywhere in the world, the higher rate of stamp duty land tax (SDLT) is due in Scotland and Wales, but cuts in at £40,000 in England.

Different countries, different rates

The higher rate in each country is the standard rate plus 3%.

In England, if the buyer is a first time home buyer, no stamp duty is due on the first £300,000 of the purchase price and SDLT is charged at 5% on the amount between £300,001 and £500,000, while SDLT on first-time buyer properties worth more than £500,000

So, for an average priced property on the market for £227,181 in England is:

  • The standard rate of SDLT is 0% for the first £125,000 and 2% for the next £102,181, which is £2,043.62.
  • Expat buyers paying the higher rate would be charged 0% for the first £40,000, 3% for the next £85,000 (£2,550) and 5% on the next £102,181 (£5,109.05), making an SDLT bill of £7,659.05.

Other SDLT rates apply for corporate buyers.

SDLT is due within 30 days of completing a property purchase.

SDLT rates –  England

Purchase price bands (£) FTB Standard Higher
Up to £40,000 0% 0% 0%
Up to £125,000 0% 0% 3%
£125,001 to £250,000 0% 2% 5%
£250,001 to £925,000 5% 5% 8%
£925,001 to £1,500,000 10% 10% 13%
Above £1,500,001 12% 12% 15%

Source: HMRC

SDLT rates – Scotland

Purchase price bands   Standard Higher
Up to £145,000 0% 3%*
£145,000 to £250,000 2% 5%
£250,000 to £325,000 5% 8%
£325,000 to £750,000 10% 13%
Over £750,000 12% 15%

Source: Scottish Government

SDLT Rates – Wales

Purchase price bands   Standard Higher
Up to £180,000 0% 3%
£180,000 to £250,000 3.5% 6.5%
£250,000 to £400,000 5% 8%
£400,000 to £750,000 7.5% 10.5%
£750,000 to £1,500,000 10% 13%
Over £1,500,000 12% 15%

Source: Welsh Assembly

Find out more:

SDLT in England

Land Transaction Tax (LTT) in Wales

Land & Buildings Transaction Tax (LBTT) in Scotland

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