You pay Stamp Duty Land Tax when you complete the purchase, not when you exchange contracts. The law gives you 14 days after the effective date, which is usually the completion date, to file the SDLT return and pay the tax. In practice, most solicitors and conveyancers file and pay on the day of completion and add the tax to their bill. If you miss the 14 days, there is an automatic £100 penalty plus interest. In Scotland and Wales, which have their own taxes, the deadline is 30 days.
The 14-day rule
Section 76 of the Finance Act 2003 requires the buyer to deliver a land transaction return within 14 days after the effective date of the transaction. Section 86 requires the tax to be paid by the same filing date. HMRC's payment guidance puts it simply: submit a return and pay any duty within 14 days of the "effective" transaction date.
Three practical points follow:
- Weekends and bank holidays do not extend the deadline. If day 14 falls on a weekend or bank holiday, the payment must reach HMRC by the end of the previous working day;
- A return can be due even when no tax is. A purchase for £40,000 or more generally needs a return, even if reliefs or thresholds reduce the tax to nil;
- The buyer is responsible. Your solicitor normally files for you, but HMRC's guidance is clear that you remain responsible for the return arriving on time and being correct.
What counts as the effective date
The effective date is usually completion. However, SDLT can be triggered earlier if the contract is substantially performed before completion. Under section 44 of the Finance Act 2003, this happens when:
- You take possession. This means possession of the whole or substantially the whole property, including under a temporary licence or lease, or receiving the rents;
- You pay most of the price. HMRC normally treats this as 90% or more of the consideration;
- You pay the first rent. This applies to leases.
This matters in new-build purchases, early access to do works, and sales with deferred completion. A buyer who moves in early, or pays nearly all the price before legal completion, can find the 14 days started weeks before the solicitor expected. In those cases the return is filed at substantial performance, and a further return may be needed at completion.
Is it paid at exchange or completion?
Exchange of contracts does not trigger SDLT on its own. Section 44 says a person is not treated as entering into the land transaction just by entering into the contract. The deposit paid on exchange is not stamp duty. The tax becomes due on completion, or earlier if the contract is substantially performed, and your solicitor will usually ask for the SDLT money before completion so it can be paid on the day.
On a typical purchase, the sequence is:
- Before completion. Your solicitor works out the SDLT and asks you for the funds along with the balance of the price;
- Completion day. The solicitor files the return online and gets a Unique Transaction Reference Number (UTRN) and an SDLT5 certificate, then pays HMRC;
- Registration. The SDLT5 goes to HM Land Registry with the application to register you as owner.
If you are buying without a solicitor, you file a paper SDLT1 return yourself. Allow for postal times and the payment method. CHAPS and Faster Payments arrive the same or the next working day, Bacs takes 3 working days, and card payments count on the day you make them. You cannot pay with a personal credit card. The filing mechanics are covered in our guide to the SDLT return.
What happens if you pay late
HMRC's penalty guidance and Schedule 10 to the Finance Act 2003 set the charges:
| Failure | Consequence |
|---|---|
| Return filed up to 3 months late | £100 fixed penalty |
| Return filed more than 3 months late | £200 fixed penalty |
| Return not filed within 12 months of the filing date | Tax-based penalty of up to the full tax due, on top of the fixed penalty |
| Tax paid late | Interest from the day after the payment was due |
Interest is not a penalty and cannot be appealed. A late filing penalty can be appealed if an unforeseeable event beyond your control stopped you, or someone acting for you, from filing.
Later dates that also matter
- Amending the return. You have 12 months from the filing date (14 days after the effective date) to amend an SDLT return, for example to claim a relief that was missed;
- Higher rates refund. If you paid the 5% higher rates because you had not yet sold your old home, and you sell it within 3 years of buying the new one, you can reclaim the surcharge. Claim within 12 months of the later of the sale or the filing date of the new return;
- Contingent or deferred price. If part of the price depends on future events, further returns and payments can follow when the amount becomes known.
Scotland and Wales
SDLT covers England and Northern Ireland. In Scotland, Land and Buildings Transaction Tax is due to Revenue Scotland. In Wales, Land Transaction Tax is due to the Welsh Revenue Authority. Both require the return and the tax within 30 days, counted from the day after the effective date. They also have different rates and bands. For the current English rates, including the £125,000 residential nil-rate band and the 5% surcharge, see our guide to stamp duty changes.
Acumon's SDLT advisers review complex transactions before completion, including substantial performance, mixed-use and linked purchases. We also handle amendments and higher-rate refund claims after the event. Investors and landlords can combine this with our property tax service.