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 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 Stamp Duty?
All property purchases are potentially liable for Stamp Duty but there are some situations where the amount payable can be increased or decreased from the standard rates.
If you buy a residential property for less than £250,000, there’s no SDLT to pay.
For non-residential land and properties the threshold is £150,000.
For first time buyers there is no stamp duty to pay on purchases of £425,000 or less.
How much is Stamp Duty?
There are set rates for stamp duty and they differ according to the value of the property you are buying.
|Property or lease premium or transfer value||SDLT rate|
|Up to £250,000||Zero|
|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%|
In addition, these rates can change for the reasons below.
If you’re buying a residential property there are different rates of SDLT if:
- you’re a first-time buyer
- you already own a property and you’re buying an additional property
- you’re not a UK resident
FIRST TIME BUYER
You can claim a discount (relief) if the property you buy is your first home.
As a first time buyer you will therefore pay no stamp duty if your purchase price is £425,000 or less.
NON UK RESIDENT
A 2% surcharge is added to each of the other rates for buyers who are non-UK residents.
Stamp Duty Calculator
Use our stamp duty calculator to see how much you are likely to pay.
Stamp Duty Calculator
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.
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.
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.
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.
- 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
As a FTB you will pay no stamp duty upto £425,000 and 5% between £425,001 and £625,000.
For purchases in excess of £625,000 you will be charged the normal rate without the FTB concession.
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.
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.
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