Stamp Duty Land Tax (SDLT) – What is it and how much does it cost?
When you buy a residential property in England and Northern Ireland you will be subject to a government tax called Stamp Duty Land Tax (SDLT).
It does not apply to all transactions and your solicitor or conveyancer will normally tell you how much it is for your situation. Here we provide a quick overview of Stamp Duty and who it applies to.
What is Stamp Duty?
Stamp Duty, or Stamp Duty Land Tax (SDLT), is a government tax that’s paid on purchases of property and land. This includes residential and commercial property as well as plots of land.
Stamp Duty is the name in England and Northern Ireland. For Scotland and Wales it is known as ‘Land and Buildings Transaction Tax‘ and ‘Land Transaction Tax‘. They work in much the same way but the rates and value bands are different.
This page provides stamp duty information for England and Northern Ireland.
Who Pays SDLT?
Most property purchases are potentially liable for SDLT, but certain situations can increase or decrease the amount due.
Standard Rate: If you’re buying your main residence, you won’t pay SDLT on the first £250,000 of the purchase price.
First-Time Buyers: Eligible first-time buyers benefit from a higher nil-rate band of £425,000 (for properties up to £625,000).
Second Homes and Buy-to-Let: An additional 3% SDLT is payable on second homes and buy-to-let properties, regardless of the purchase price.
Non-UK Residents: A 2% surcharge is added to each SDLT rate for non-UK residents.
How much is Stamp Duty?
SDLT rates are tiered and vary depending on the property price and your circumstances.
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | 0% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Please note: These are standard rates. Different rates apply to first-time buyers, additional properties, and non-UK residents.
Stamp Duty Calculator
Use our SDLT calculator to estimate how much you might need to pay.
How can I reduce Stamp Duty?
Being aware of the stamp duty rate bands (see above) can help you to reduce stamp duty. If a property’s price is just into a higher band then negotiating the price down into the lower band will save money.
Additionally, SDLT is only charged on the price paid for the property or land. So if you have agreed a price that includes certain fixtures and fittings then you should be able to deduct these from the purchase price for the purposes of calculating stamp duty.
EXAMPLE
Agreed purchase price of £500,000 which includes £20,000 for curtains, carpets and white goods.
SDLT payable on £480,000 (£500,000 less £20,000)
Any agreement with the vendor (seller) must be notified to the estate agent and conveyancer so it can be included with the legal agreements for both parties.
When do I have to pay Stamp Duty?
You must send a Stamp Duty Land Tax return to HMRC and pay the required tax within 14 days of legal completion.
If you have a solicitor, agent or conveyancer, they will usually file your return and pay the tax on your behalf on the day of completion.
They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.
Your solicitor or conveyancer will ask you to send them the stamp duty payment at some point prior to exchange of contracts so this needs to be factored in for cash flow purposes.
Do you pay stamp duty on a remortgage?
When remortgaging your home or raising money for home improvement projects, you don’t need to worry about paying Stamp Duty. That’s because tax is only applicable when purchasing a new property or land.
However, if you’re remortgaging your home and also transferring equity from one person to another (for example, adding or removing a partner’s name from the mortgage), then you may be liable for Stamp Duty.
Read more: Do you pay stamp duty on a remortgage?
Stamp Duty for first time buyers
There are different stamp duty rules for first time buyers which help to reduce the cost of purchasing your first home.
TO QUALIFY:
- Everyone buying the property must never have previously owned any properties
- The new property should be your main residence
- The purchase price must be below £625,000
Stamp Duty for second homes and buy to let
If you already own a property and you are buying another in the UK then there will be additional stamp duty to pay.
This only applies if you are buying property to keep in addition to your main residence.
This could be:
- A holiday let
- A buy to let
- A second home or holiday home
For these additional properties there is a 3% surcharge in addition to the standard rates, even within the first band.
This means that if you buy an additional property for less than £250,000 you still need to pay the 3% surcharge on the purchase price.
If you are buying a second home with the intention of living in it, but plan on selling your main residence at a later date, you may be able to claim back the additional property surcharge. Ask your conveyancer to confirm whether this is possible.
Useful Links:
Stamp Duty Land Tax – England & Northern Ireland
IMPORTANT
All information is believed to be correct at the time of publishing. Our stamp duty calculator and the rates shown are for guidance only. Tax rules can change and everyone has their own unique property situation. Before making any financial decisions you must always consult with a tax adviser regarding your stamp duty land tax position.