A Guide to Stamp Duty

Information and calculators to work out your Stamp Duty requirements.

A Guide to Stamp Duty

What is Stamp Duty?

Stamp Duty is the tax payable to the government for changing the documents that specify who owns a particular property. It is one of the principal costs you will encounter when purchasing a property.

Stamp Duty commenced in the UK in 1694 and, although its scope is not as widespread as it was at that time and a physical stamp is no longer necessary, it is still prevalent today; occurring through a series of stamp acts.



First time buyer? Read our First TIme Buyers Guide



Stamp Duty Land Tax

The Stamp Duty Land Tax (SDLT) is a tax that is charged on land transactions, including the buying and selling of a residential property.

SDLT is a form of self-assessed transfer tax that was introduced by the Finance Act 2003 with effect from 1 December 2003. Although this replaced the previous Stamp Duty regulations, the alterations to Stamp Duty were minimal. Changes do, however, include that a tax return is made out to the HM Revenue & Customs (previously Inland Revenue). Enquiries into SDLT returns and the recovery of unpaid SDLT are now also permitted.

Further reforms were introduced in December 2014, changing the rates home buyers pay in stamp duty.

Regardless of whether tax is payable on a property, you are obliged to provide a return to HM Revenue & Customs. If the return is not received within four weeks of the completion of the transaction, you could be issued with a fine.

It is impossible to register a change in the ownership of land without the Certificate that is provided by HM Revenue & Customs following the acceptance of a return.

Stamp Duty for residential land purchases

The amount of stamp duty for residential land purchases depends on several key factors, such as whether the property is a new build home and the value of the property.

Stamp duty is payable on the rate of tax on the part of the property price within each tax band. This follows the reform in December 2014, which differs from being worked out as a percentage of the whole purchase price.

These rates are paid only on the part of the property price within each tax band:

  • 0% on the first £125,000 paid

  • 2% on the property price between £125,001 and £250,000

  • 5% on the property price between £250,001 and £925,000

  • 10% on the property price between £925,001 and £1,500,000

  • 12% on the property price of £1,500,001 and over

For example, a house priced at £260,000 would attract an SDLT of £3,000, whereby 2% will be paid on £125,00 to £250,000 of the purchase price, and 5% stamp duty will be paid on the remaining £250,001 to £260,000. 

A house valued at £940,000 will pay a total of £37,750 and will range across 3 stamp duty percentage rates:
 

Purchase Price Bands (£)

Percentage Rate (%)

SDLT due

Up to 125,000

0

0

125,001 to 250,000

2

2,500

250,001 to 925,000

5

33,750

925,001 to 1,500,000

10

1,500

Above 1,500,000

12

0

 

Total SDLT due:

37,750


In London, the average asking price for a home is currently £600,000. Before December 2014, the stamp duty would have cost £24,000. Under the revised system, the Stamp Duty is £20,000

In the new system, home buyers purchasing a property worth less than £937,000 will pay the same amount or less stamp duty.

If you had exchanged contracts before the introduction of the stamp duty reforms but had not yet completed, you are able to choose which rule to use to calculate how much stamp duty you will pay.  



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Stamp Duty calculator

You can also find out the Stamp Duty Land Tax cost of your house move through our Moving Cost Calculator.

Stamp Duty in Scotland

Changes to stamp duty in Scotland were announced in Scotland’s budget proposal for 2015.

Stamp duty on properties costing less than £135,000 will no longer be payable, in an aim to help first time buyers.

Under the new system, properties worth between £135,000 and £250,000 will pay 2% stamp duty, and those costing between £250,000 and £1 million will incur a 10% tax. There will be a 12% tax on homes worth more than £1 million.

The changes will be in effect from April 2015.

page last updated December 2014

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Comments

  • Sye says...

    posted on 26/08/2012 09:17:23

    Great information please let me know what we are getting for paying this stamp duty ....many thx

  • Sherry says...

    posted on 17/09/2012 12:24:19

    is it true that there is no stamp duty on new build properties?

  • shirley hambelton says...

    posted on 23/07/2014 22:56:05

    I am shocked! We had no idea of the costs involved, we last moved 17 years ago, because of your article we shall have to revise our plans, good job that one of the agents sent this onto us, so we are very grateful, wow, what a shock, thanks very much, shirley