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 over a certain amount in England, Wales and Northern Ireland.

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.

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.

From 1st April 2016, anyone buying an additional residential property such as a second home or buy-to-let will have to pay an extra 3% on top of existing SDLT. This announcement was made in Chancellor George Osborne’s 2015 Autumn Statement.

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 30 days 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 (%)

Up to 125,000

0%

125,001 to 250,000

2%

250,001 to 925,000

5%

925,001 to 1,500,000

10%

Above 1,500,000

12%

 

In London, the average asking price for a home is currently £616,000. Before December 2014, the stamp duty would have cost £24,640. Under the revised system, the Stamp Duty is £20,800.

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

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 for Buy-To-Let

From April 2016, if you are purchasing an additional residential property such as a second home or buy-to-let you will need to pay a 3% SDLT surcharge on top of your current stamp duty.

You will not need to pay the higher rates if you are purchasing a caravan, mobile home or houseboat. If the total property value is under £40,000 you will not be required to pay any SDLT.

It is important to note that if you purchase a new home before you have sold your first property you will also have to pay the additional 3% SDLT. If you are unable to sell your first home within 18 months of buying your new property, then you will not be entitled to reclaim the 3% SDLT surcharge.

Buy-to-let stamp duty rates from 1st April 2016:

Purchase price bands (£)

Current percentage rate (%)

New percentage rate (%)

Up to £125,000

0%

3%

£125,001 to £250,000

2%

5%

£250,001 to £925,000

5%

8%

£925,001 to £1,500,000

10%

13%

Above £1,500,000

12%

15%

Scotland-Land and Buildings Transaction Tax

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

From April 2015, stamp duty in Scotland is referred to as ‘Land and Buildings Transaction Tax.’ This includes residential and commercial land and buildings transactions.
Properties costing less than £145,000 will no longer be payable, in an aim to help first time buyers.

Land and Buildings Transaction Tax bands:

Purchase price bands (£)

LBTT percentage rate (%)

Up to £145,000

0%

Above £145,001 to £250,000

2%

Above £250,001 to £325,000

5%

Above £325,001 to £750,000

10%

Over £750,000

12%

 

From 1st April 2016, any property buyers in Scotland will pay an extra 3% surcharge for additional properties such as second homes and buy-to-let. Any property under the total value of £40,000 will not have to pay the extra LBTT.

 

Purchase price bands (£)

Current LBTT percentage rate (%)

New LBTT percentage rate (%)

Up to £145,000

0%

3%

£145,001 to £250,000

2%

5%

£250,001 to £325,000

5%

8%

£325,001 to £750,000

10%

13%

Above £750,000

12%

15%

Mixed Use Property

Properties accepted as being mixed use qualify for a lower stamp duty rate than residential properties, under a rule introduced in 2000 by Gordon Brown.

For a mixed use property you pay:

  • 1% on properties from £150,000 to £250,000

  • 3% on £250,000 to £500,000

  • 4% on properties worth over £500,000

What is considered a mixed use house is determined by HMRC on a case-by-case basis, however, the burden on proving a property’s mixed use is on the buyer, not the seller. There is no clear definition for what constitutes as a mixed use property.

Last reviewed August 2016.

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

  • Lorraine says...

    posted on 01/03/2016 09:03:31

    We're retired and thought we might downsize, the calculations reveals we can't afford to do so. Absolutely ludicrous that stamp duty should cost so much, how can a few taps on a keyboard and a piece of paper be so expensive and as for estate agent fees, charging a percentage of the sale price is daylight robbery. Why should the same percentage fee be paid to them regardless of the size and location of a property especially so for properties that are sold quickly compared to those that sit on the market for months. Their fee is far higher than a solicitors who have more work to do. Why not a flat rate for a property that sells quickly and another for those that don't.

    Hi Lorraine.  Thanks for your comments, and we entirely sympathise with you situation.

    If you are living in an area where houses sell quickly with minimal effort, you may want to try an online estate agent hybrid such as www.ewemove.com or www.purplebricks.com.  They work out hundreds of pounds cheaper.

    Good luck

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