New-Build SDLT 2026

SDLT crystallises at completion, not exchange. Off-plan purchases use the rates in force at completion. Most developer incentives (paid stamp duty, paid fees, upgrades) do NOT reduce the SDLT base. Self-build SDLT is on land only.

The effective date and why it matters

Under section 119 of the Finance Act 2003, SDLT is calculated on the effective date of the transaction, which is normally the date of completion (the date the buyer becomes entitled to take possession). For a standard residential purchase the effective date is the same as the completion date specified in the contract. For new-builds the picture is more nuanced because contracts often anticipate a future completion date months or years after exchange.

For a new-build that completes on a fixed date with possession transferring at that date, the effective date is the actual completion date, and SDLT is calculated using the rates in force at that date. If the buyer exchanged in early 2024 at a £250,000 SDLT-holiday nil-rate threshold and completes in May 2025 after the threshold has reverted to £125,000, the higher SDLT bill at the new threshold applies because the effective date is the May 2025 completion, not the early-2024 exchange.

The exception is “substantial performance” under section 44 FA 2003: if the buyer takes possession of the property before legal completion (e.g. moves in with the developer's consent during construction), the effective date is the date of substantial performance, not the later legal-completion date. This is uncommon for new-builds but matters for some sale-and-leaseback structures and right-to-buy completions.

Off-plan purchases and rate-change exposure

An off-plan purchase is one where the contract is exchanged before the property is physically complete, with completion scheduled for a future date (typically 6-24 months later). Off-plan buyers commit to a purchase price at exchange and pay a deposit (typically 10%), but SDLT is calculated at the rates in force at the eventual completion date. This creates rate-change exposure if SDLT changes between exchange and completion.

The 31 October 2024 surcharge increase from 3% to 5% caught a large number of off-plan second-home and buy-to-let buyers who had exchanged at the lower rate. Most exchange contracts allocate the rate-change risk to the buyer (the buyer pays whatever SDLT is actually due at completion), so the £20k typical surcharge increase on a £500k second-home purchase landed on the buyer's side. Some developers offered to absorb the increase as a sales gesture, but this was discretionary and not contractual.

Transitional rules: if the contract was exchanged on or before 31 October 2024 and completed shortly afterwards, the lower 3% surcharge applied. The exact transitional rule was in the Autumn Statement 2024 measure, with a tight window (typically same-day exchanges) for the transitional protection.

Developer incentives and the SDLT base

New-build developers offer a range of incentives to close sales: cash discounts, paid stamp duty, paid legal fees, free white goods, free upgrades, deposit-match contributions, Help to Buy contributions (now closed to new), and various flavour-of-the-month promotions. The SDLT treatment differs by incentive type, governed by the chargeable consideration rules in section 50 and Schedule 4 FA 2003 and HMRC's SDLT Manual at SDLTM04020.

Genuine cash price discounts reduce the SDLT base: if the headline price is £400,000 and the developer reduces to £390,000, SDLT is calculated on £390,000. Paid stamp duty, paid legal fees, paid removals, and free upgrades typically do not reduce the SDLT base, because they are treated as part of the package the buyer is acquiring. A £400,000 new-build with “developer pays £15,000 of your stamp duty” is treated as a £400,000 purchase where the buyer pays £15,000 in SDLT and the developer separately reimburses the buyer £15,000.

Deposit-match contributions from the developer (e.g. “developer matches your 5% deposit”) generally count as part of the consideration if structured as a payment by the developer to the lender to reduce the loan principal. They are treated more favourably if structured as a true reduction in the headline price. HMRC's position has tightened since 2018 with a series of FTT cases, and the standard developer practice is now to advise that incentives do not reduce SDLT unless they are explicit price reductions.

Help to Buy and shared equity loans

The Help to Buy Equity Loan scheme in England closed to new applications on 31 October 2022. Historic Help to Buy loans remain in place, and the SDLT treatment continues to matter for repeat sales. The full purchase price including the government equity loan is the SDLT base: a £400,000 new-build originally bought with a 20% Help to Buy equity loan paid SDLT on £400,000 at the time, not on the £320,000 cash portion.

For a subsequent buyer purchasing the property and assuming responsibility for the Help to Buy loan repayment, the SDLT base is the buyer's cash payment to the seller plus the value of the Help to Buy loan being assumed. If the resale price is £500,000 and the Help to Buy loan balance is £100,000 (with the seller receiving £400,000 cash), the new buyer's SDLT base is £500,000 not £400,000, because the new buyer is acquiring the property worth £500,000 with a liability to repay £100,000 to the government.

Shared ownership has a different scheme and different SDLT treatment - see shared-ownership SDLT.

Self-build SDLT: land only

Where the buyer purchases land and separately commissions a builder to construct a dwelling, SDLT is calculated only on the land purchase, not on the subsequent build cost. The key structural requirement under sub-section 44(7) FA 2003 is that the land contract and the build contract are genuinely separate; if they are linked transactions or part of a single composite arrangement, HMRC can treat the combined cost as the SDLT base.

Most self-builds buy a residential plot for between £80,000 and £200,000, well below the £125,000 residential nil-rate threshold (or the £150,000 non-residential threshold if the land is held as non-residential pre-development). SDLT on a £100,000 plot is £0; on a £180,000 plot in a residential setting is £1,100 (2% on £55,000 above £125,000). The build cost of £200,000-£500,000 is not subject to SDLT.

Where the land vendor is also providing a turn-key build under a single contract (a builder selling a finished house on its own land), the SDLT base is the total price for the finished property, not just the land value. HMRC's SDLT Manual at SDLTM07650 sets out the line between separate-contract self-build (land-only SDLT) and composite arrangement (full-price SDLT).

FTB relief and the SDLT-free new-build

FTB relief is available on new-build purchases on the same terms as any other residential purchase: 0% to £300,000, 5% on the slice from £300,001 to £500,000 (full Market Value), with relief lost entirely above £500,000. Many new-build developments are specifically priced to FTB demand at the £200,000-£350,000 price band, which is the sweet spot where FTB relief delivers material savings (£1,500-£5,000 versus standard).

For new-build FTBs at the £500,000 cliff edge, the standard advice is to avoid exceeding £500,000 by any margin. Developer-side advice often nudges buyers toward upgrades and extras that take the price above £500,000 without realising the £5,000-£15,000 SDLT step jump triggered by the cliff. See first-time buyer relief.

Frequently Asked Questions

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