What is Stamp Duty and how is it calculated?
Stamp duty is a tax paid by people buying property, although it varies slightly across the UK.
- In England and Northern Ireland buyers pay 'Stamp Duty Land Tax' (SDLT).
- In Scotland it's 'Land and Buildings Transaction Tax'.
- In Wales buyers pay 'Land Transaction Tax'.
The amount handed to the government depends on where you are in the UK, and the price of the property.
Stamp duty (SDLT) applies if the property is over £250,000. This tax is also applicable to overseas buyers.
SDLT is charged on the whole amount and is rounded down to the nearest £1.
Since 4th December 2014, you only pay the rate of tax on the part of the property price within each tax band.
From April 2016, an additional 3% stamp duty must be paid on second homes and buy-to-let properties.
From November 2017, first-time buyers will pay zero stamp duty on the first £300,000 of any home costing up to £500,000 (and only 5% on any proportion between £300k and £500k).
From July 8th 2020, a 'stamp duty holiday' was announced aimed at helping buyers whose finances were affected by Covid and boosting a property market hit by lockdown. More details below.
From September 23rd 2022, a 'mini-budget' was announced which included amendments to stamp duty rates. More details below.
What are the stamp duty rates?
The freehold residential stamp duty rates in England and Northern Ireland are shown in the tables below showing stamp duty rates from 23rd September 2022.
|Property price||Standard rate||Buy-to-let/second home rate|
|less than £250k||0%||3%|
|£250k to £925k||5%||8%|
|£925k to £1.5m||10%||13%|
* An additional property purchased for less than £40k will attract 0% tax. For purchases from £40k to £250k the SDLT rate will be 3% on full purchase price.
Always check with your solicitor before you buy and ensure you know the latest legislation.
First time buyers
First time buyer relief is available for property purchases below specific thresholds. First time buyers will not pay any stamp duty on property purchases below £425,000 with further relief available for transactions up to £625,000.
Buy to let & second homes
Stamp duty rates have increased for anyone purchasing an additional property. Additional property types include buy to let investments and second homes. Since April 2016, a 3% surcharge has been applied on top of the normal SDLT rate.
The higher stamp duty rates only apply to additional residential property. Land and other types of property are not normally considered when determining ownership of additional property for stamp duty purposes.
Stamp Duty Holiday
The stamp duty holiday was introduced which increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 30 June 2021.
This meant anyone (including first-time buyers, buy-to-let and foreign buyers) completing on a main residence costing up to £500,000 between 8th July 2020 and 30th June 2021 had no stamp duty to pay.
The stamp duty holiday came to an end on 30th June 2021 however, until the end of September 2021, there was a staggered return to the previous stamp duty rates. From 1st October 2021, stamp duty returned to normal (pre-Covid).
The Mini Budget on 23rd September 2022
A mini-budget was announced on 23rd September 2022 where there were 3 main amendments:
- No duty on first £250,000 of property's value, up from £125,000
- For first time buyers, there will be no duty on the first £425,000 of property's value, up from £300,000
- For first time buyers, relief will be applicable to properties worth up to £625,000, compared with the current £500,000.
How do I pay Stamp Duty?
Typically, your Solicitor will assist you with Stamp Duty payments.
When is Stamp Duty paid?
Stamp duty now must be paid to the HMRC within 14 days of the date of completion. The 14 day period for submitting a stamp duty return has been effective from March 2019 and has been reduced from 30 days.
Your solicitor or legal adviser should take care of this for you and ensure you don't miss the deadline.