Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land over a certain price.
You will pay Stamp Duty on residential properties costing more than £250,000 unless you qualify for first-time buyers’ relief.
If you’re an eligible first-time buyer, you will pay no Stamp Duty on properties costing up to £425,000, and a discounted rate on property purchases up to £625,000.
This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.
How much is Stamp Duty?
There are several rate bands for Stamp Duty.
The tax is calculated on the part of the property purchase price falling within each band.
You’ll pay Stamp Duty on the purchase of your main property costing more than £250,000, unless you’re a first-time buyer.
Example
For example, if you buy a house for £350,000, the Stamp Duty Land Tax you owe is calculated as follows:
- 0% on the first £250,000 = £0
- 5% on the portion from £250,001 and £350,000 = £5,000
Total SDLT = £5,000
Stamp duty rates
Minimum property purchase price Maximum property purchase price Stamp Duty rate
£0 £250,000 0%
£250,000 £925,000 5%
£925,000 £1,500,000 10%
Over £1.5 million 12%
Stamp Duty on second homes
If you’re buying an additional property, such as a second home you’ll have to pay an extra 3% in Stamp Duty on top of the standard rates.
This increased rate applies to properties bought for £40,000 or more.
It doesn’t apply to caravans, mobile homes or houseboats.
Minimum property purchase price Maximum property purchase price Stamp Duty rate)
£0 £250,000 3%
£250,001 £925,000 8%
£925,001 £1.5 million 13%
Over £1.5 million 15%
Example
For example, if you buy a 2nd house for £350,000, the Stamp Duty Land Tax you owe is calculated as follows:
- 3% on the first £250,000 = £7,500
- 8% on the portion from £250,001 and £350,000 = £8,000
Total SDLT = £15,500
Stamp Duty relief for first-time buyers
If you’re a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties worth up to £425,000.
For properties costing up to £625,000, you will pay no Stamp Duty on the first £425,000. You’ll then pay Stamp Duty at the relevant rate of 5% on the remaining amount, up to £200,000.
If the property you’re buying is worth over £625,000, you will need to pay the standard rates of Stamp Duty and won’t qualify for first-time buyer’s relief.
Repayment / refund of higher rates of Stamp Duty
If you buy a new main residence but there’s a delay in selling your previous main residence, you might have to pay the higher rates of Stamp Duty as you’ll now own two properties.
However, if you sell your previous main home within three years of buying your new home you might be able to apply for a refund of the higher SDLT rates you paid when you purchased your new home.
You can request a refund for the amount above the normal Stamp Duty rates if:
- you sell your previous main residence within three years, and
- you claim the refund within 12 months of the sale of your previous main residence, or within 12 months of the filing date of your SDLT tax return, whichever comes later.
How to pay Stamp Duty
Usually, your solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself.
Either way, you’re responsible for making sure it’s all submitted on time.
You must still submit a return (unless exempt) even if you won’t need to pay any Stamp Duty.
And there you have it, folks – a comprehensive guide to stamp duty, tailored just for you. Armed with this knowledge, you’re ready to tackle the property market like a pro. Happy house hunting!
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