Stamp duty in the UK is definitely something that every buyer and buy-to-let investor needs to consider carefully. The rules and amounts around it are subject to change, it doesn’t apply to everyone, it can add thousands to a property purchase and legislation is different in Scotland and Wales from the rest of the UK.
To help clarify things, we have created an SDLT calculator, free for you to use or copy for your website and we have produced this document to explain how Stamp Duty is calculated and when and how it should be paid.
Please note, nothing here should be taken as financial advice and we suggest you talk to a financial consultant before you make any purchases.
- What is Stamp Duty
- Stamp Duty Calculator
- When Do You Pay Stamp Duty?
- SDLT - Useful Statistics
- When are Your Entitled to a Stamp Duty Refund
- Stamp Duty Rates in England, 2019
- Relief for First-Time Buyers
- Stamp Duty for Additional Properties
- Different Rates
- Stamp Duty in Scotland
- Stamp Duty in Wales
- Changes to Stamp Duty
What Is Stamp Duty?
Stamp Duty is a tax that is charged by the Government when you buy a freehold property. Its correct name is Stamp Duty Land Tax or SDLT for short.
Stamp Duty is also charged when you buy a new or existing leasehold.
It’s an odd name for a tax don’t you think? The term Stamp Duty dates back to the time when it was a small duty charged for stamping documents but, today, Stamp Duty is a tax used to raise Government revenue.
Stamp Duty only applies when buying property in England or Northern Ireland. If you are buying in Scotland a different tax called LBTT applies. If you are buying in Wales a different tax called LTT applies.
The easiest way to find out how much Stamp Duty you might have to pay is to use the Stamp Duty Calculator below.
When Do You Pay Stamp Duty?
You may have to pay Stamp Duty whenever you buy a home.
Not every property purchase is liable for Stamp Duty though. If you’re buying a lower value property or you’re a first-time buyer you might not have to pay Stamp Duty.
Whenever you buy a property you need to fill in a Stamp Duty Return, send it to HM Revenue & Customs (HMRC) and pay any Stamp Duty you owe within 14 days of completion of the property purchase. If you don’t file your Stamp Duty Return on time there may be a penalty.
If you use a solicitor or conveyancer to buy your house they will file the Stamp Duty Return for you. They’ll ask you to pay any Stamp Duty you owe to them, and they will pay it to HMRC.
Stamp Duty Land Tax Useful Statistics
- In 2017-2018 the Government received £12,905 million from Stamp Duty Land Tax.
- There were 1.1 million house purchases on which Stamp Duty was paid.
- SDLT receipts increased 10% compared to the previous year.
- 97.3% of SDLT revenue came from buyers in England, with just 2% from Wales and 0.7% from Northern Ireland buyers.
- London buyers paid more SDLT than any other area. London buyers paid around two-thirds of all the Stamp Duty paid in England …. £4,860 million of it.
- 69,100 people claimed first-time buyer’s relief from SDLT and saved £160 million in total.
When Are You Entitled To A Stamp Duty Refund?
In some cases, you’re entitled to a refund of Stamp Duty you’ve paid. This may be because you had to pay the higher rate of Stamp Duty since the property you bought was not your main home, but then you sold your main home within three years.
The Stamp Duty refund process is designed so that people who buy a new home before selling their old one are not charged the higher rates of Stamp Duty that investors and second homeowners have to pay.
| Property value: | SDLT Rate |
|---|---|
| Up to £125,000 | Zero |
| The next £125,000 (the portion from £125,001 to £250,000) |
2% |
| 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% |
So for example, if you buy a house for £275,000 the SDLT you owe is:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT = £3,750
The easiest way to find out how much Stamp Duty you will pay is to use our Stamp Duty Calculator.
Stamp Duty Relief For First Time Buyers
First-time buyers are eligible for a Stamp Duty discount (known as a relief) and do not pay any Stamp Duty on a purchase up to £300,000 and then 5% on the portion from £300,001 to £500,000.
If the purchase price is over £500,000 the rates are the same as for people who have bought a home before.
To qualify for first-time buyer relief the house must be your own home. You and anyone you buy with must not have owned a property before.
The Stamp Duty Calculator can help you find out if you might qualify for a Stamp Duty discount.
Stamp Duty For Additional Properties
If the property you are buying is what is known as an additional property then you will have to pay a higher rate of Stamp Duty. This is 3% on top of the normal rate for each band in the table above.
Additional properties are any property purchases which mean you will then own more than one. So buyers of second homes, buy to let property and investment property usually pay more SDLT.
Different Rates Of Stamp Duty
There are also some different rules and rates of SDLT in some cases. These include: If you are buying a mixed-use property. If you are a corporate body. If you are buying six or more properties in one transaction. For shared ownership properties. For multiple purchases or transfers between the same buyer and sellers known as linked purchases.
Stamp Duty in Scotland: Land and Buildings Transaction Tax or LBTT
In Scotland, Stamp Duty is called Land and Buildings Transaction Tax or LBTT. The way LBTT works is set by the Scottish Government and it is administered by Revenue Scotland.
LBTT is charged at the following rates on the amount of the purchase within each band as follows:
| Purchase price: | LBTT Rate |
|---|---|
| Up to £145,000 | Zero |
| £145,000 to £250,000 | 2% |
| £250,000 to £325,000 | 5% |
| £325,000 to £750,000 | 10% |
| Over £750,000 | 12% |
LBTT also has an Additional Dwelling Supplement known as ADS if your purchase is a second home or investment property. The rate of ADS is 4%.
You can find more information on LBTT here.
Stamp Duty in Wales: Land Transaction Tax or LTT
In Wales, Land Transaction Tax or LTT replaced Stamp Duty in 2018. The way LTT works is set by the Welsh Government and it is administered by the Welsh Revenue Authority.
LTT is charged at the following rates on the amount of the purchase within each band as follows:
| Purchase price: | LTT Rate |
|---|---|
| Up to £180,000 | Zero |
| £180,000 to £250,000 | 3.5% |
| £250,000 to £400,000 | 5% |
| £400,000 to £750,000 | 7.5% |
| £750,000 to £1,500,000 | 10% |
| Over £1,500,000 | 12% |
LTT also has a Higher Residential Rate if your property is a second home or investment property. This is 3% higher than the amounts above.
You can find more information on LTT here.
Changes To Stamp Duty Rates
The rates of Stamp Duty have been changed several times over the last few years by the Government and it is possible they will be changed again from time to time.
Changes to Stamp Duty rates, if any, are usually announced by the Chancellor of the Exchequer in The Budget every autumn.
This is useful to know if you are planning on buying a house soon. There is always the possibility that the rate of Stamp Duty could be lowered or raised before your purchase is completed.
For this reason it is always important to make sure you are using the latest version of a good Stamp Duty Calculator to calculate your Stamp Duty.