Stamp Duty Land Tax and Shared Ownership

What is Stamp Duty Land Tax?

Stamp Duty Land Tax, usually called SDLT or Stamp Duty, is a tax you may need to pay when buying a property or land in England.

You may need to pay Stamp Duty Land Tax (SDLT) when you buy a home with Shared Ownership. How much you pay depends on your circumstances, the value of the home and how you choose to pay the tax.

If you're a first-time buyer, you may also be able to claim first-time buyer relief.

Stamp Duty can feel complicated, particularly with Shared Ownership. Here, we explain the basics and the choices you may need to make when buying your home.

The amount you may need to pay depends on things such as:

• the price or value used to calculate the tax
• whether you're a first-time buyer
• whether you'll own another property (not allowed with Shared Ownership - see all eligibility criteria)
• whether you're eligible for a relief or exemption.

With Shared Ownership, there are some additional rules to understand.

Do I pay Stamp Duty with Shared Ownership?

You may need to. When you buy a home with Shared Ownership, there are two ways you can choose to deal with Stamp Duty:

1. Pay any Stamp Duty due based on the full market value of your home upfront. This is known as a market value election.
2. Pay any Stamp Duty due in stages.

The right choice will depend on your circumstances, so it's important to discuss your options with your solicitor or conveyancer.

Option 1: Make a market value election

You can choose to make a one-off Stamp Duty payment based on the full market value of the home, rather than just the share you're buying.

This is called a market value election.

If Stamp Duty is due and you pay it this way, you won't pay any more Stamp Duty on the home if you buy additional shares later.

For example, if you buy a 25% share, the Stamp Duty calculation would still use the full market value of the home, not simply the price of your 25% share.

Option 2: Pay Stamp Duty in stages

Instead of making a market value election, you can choose to pay Stamp Duty in stages.

When you initially buy your Shared Ownership home, any Stamp Duty due on your first purchase is calculated using the price you pay for the lease, sometimes called the lease premium.

Stamp Duty can also be payable on the rent depending on its value over the length of the lease. HM Revenue & Customs (HMRC) calls this the net present value of the rent.

You don't normally pay further Stamp Duty when you buy more shares until your ownership goes above 80%.

This can get complicated, so your solicitor or conveyancer can explain what applies to your purchase.

What if I'm a first-time buyer?

If you're buying your first home, you may qualify for first-time buyer Stamp Duty relief.

For a standard home purchase, eligible first-time buyers currently pay:

• 0% on the portion up to £300,000
• 5% on the portion from £300,001 to £500,000.

If the home price is more than £500,000, first-time buyer relief is not available under the standard rules.

There are specific rules for Shared Ownership. First-time buyer relief can apply whether you make a market value election or choose to pay Stamp Duty in stages.

If you're buying with someone else, everyone buying the home must meet the first-time buyer requirements to qualify for the relief.

Your solicitor or conveyancer can confirm whether you qualify.

Current Shared Ownership Stamp Duty rates

The home will be your only home and where you'll live. The current standard rates for Shared Ownership in England are:

If buying the property means you'll own more than one residential property, you'll usually pay higher Stamp Duty rates. Different rules and exceptions can apply, so check your position with your solicitor or conveyancer.

Stamp Duty rates and rules can change. Always check the latest HMRC guidance and speak to your solicitor or conveyancer before making a decision.

Will I pay Stamp Duty when I staircase?

Staircasing means buying more shares in your Shared Ownership home.

What happens with Stamp Duty depends partly on the decision you made when you first bought your home.

If you made a market value election and paid any Stamp Duty due based on the home's full market value, you won't pay further Stamp Duty when you buy more shares.

If you chose to pay Stamp Duty in stages, you don't normally pay further Stamp Duty or submit another return until your share value goes above 80%.

Once your ownership goes above 80%, you'll need to submit a Stamp Duty return and tax may be due on the transaction that takes you above 80% and on later transactions.

Your solicitor or conveyancer can calculate what's due based on your individual circumstances.

When do I pay Stamp Duty?

A Stamp Duty return and any tax due normally need to be sent to HMRC within 14 days of completion.

Your solicitor, agent or conveyancer will usually submit the return and make the payment for you.

Find your home with Shared Ownership

Explore homes available with Shared Ownership or find out more about how Shared Ownership works.

Please note: This page provides general information about Stamp Duty Land Tax and isn't tax, financial or legal advice. Stamp Duty rules and rates can change, and what you pay will depend on your circumstances. Please speak to your solicitor or conveyancer and check the latest HMRC guidance before making financial decisions.