Understanding Stamp Duty Land Tax in agriculture

By Heather Bright, Partner and ARA specialist 

Stamp Duty Land Tax (SDLT) is a tax that is levied on the purchase or transfer of property or land. While it is a straightforward concept for residential properties, it becomes a bit more complex when it comes to agricultural land.

Understanding SDLT in agriculture

SDLT in agriculture is not a one-size-fits-all scenario. The tax rate can vary depending on several factors, such as the type of land, its use, and whether there are any buildings on the land.

For instance, agricultural land used solely for farming may be taxed differently than land with a farmhouse or other residential buildings.

Mixed-use properties

Where SDLT in agriculture gets more complicated surrounds its involvement with mixed-use properties. These are properties that have both residential and non-residential elements.

For example, a farm might include a farmhouse (residential) and farmland (non-residential). In such cases, the SDLT is calculated on the mixed-use property rate, which is typically lower than the residential rate.

Multiple dwellings relief

Another aspect to consider is the Multiple dwellings relief (MDR). If a property purchase includes more than one dwelling, such as a farmhouse and a cottage, it may be possible to claim MDR. This can significantly reduce the SDLT due.

Agricultural property relief

Agricultural property relief (APR) is a relief from Inheritance Tax (IHT) for agricultural property. While it does not directly affect SDLT, it is an important consideration in estate planning and property transactions.

APR can offer up to 100 per cent relief on the agricultural value of the farm, which can include the farmhouse, cottages, farm buildings, and the land itself.

Navigating SDLT in agriculture

Familiarise yourself with the basics of SDLT, including how it is calculated and what rates apply to different types of properties.

If you are planning to buy or sell agricultural property, consider the SDLT implications. This can help you budget for the tax and avoid any unpleasant surprises.

Detailed records of your property transactions should also be kept. These include the purchase price, the SDLT paid, and any reliefs claimed. This can be helpful if you need to refer to them in the future.

By understanding the basics of SDLT, planning ahead, and keeping detailed records, you can avoid any potential hiccups that SDLT can throw up.

If you would like more advice on SLDT from our expert team of tax advisors, please contact us today.