Stamp Duty Land Tax is a tax levied by the UK Government on all house or land purchases that cost above certain amounts. Therefore, stamp duty could well be payable if you buy land that already has planning permission granted, but it will be levied on the cost of the land and not the potential value of the built property.
What stamp duty is payable on my land?
You will pay stamp duty if your land is valued at £150,000 or above. At present the legislation states that stamp duty is payable on residential properties purchased for more than £125,000 and on non-residential land or properties with a purchase price of £150,000 or above.
Land that is valued at more than £150,000 will have stamp duty of 2% levied on values between £150,001 and £250,000 and above the value of £250,000 the stamp duty will be 5%. Effectively, if you buy land for £275,000, you will pay zero stamp duty for the first £150,000, 2% stamp duty on the value between £151,000 and £250,000 and 5% on the value between £251,000 and £275,000. This would give a total stamp duty charge of £3,250.
Stamp duty should be paid to HM Revenue & Customs, although it is usually sorted out by the solicitor or conveyancer that is handling the purchase of the land or property. They will generally file the return with HMRC and include the costs of stamp duty in their fees.
First time buyers benefit from reduced or nil costs of stamp duty, depending on the price of the property purchase, which can be up to a total of £500,000. In Scotland, stamp duty is not applicable, instead the Land and Buildings Transactions Tax is levied. The stamp duty exemption for first time buyers will be claimed back as a tax relief by your solicitor and there are other situations where it’s possible to claim back stamp duty land tax reliefs, for example if you are purchasing multiple dwellings or taking advantage of a right to buy property.
You can find out more about applicable rates of stamp duty or work out total costs for stamp duty at StampCalculator.