Stamp Duty

How much stamp duty will you pay?

A useful guide to calculate how much stamp duty is payable on your purchase

If you’re buying a home in England or Northern Ireland costing more than £125,000, you’ll have to pay Stamp Duty Land Tax (SDLT) on your purchase. Use this guide to find out about how Stamp Duty works, including Stamp Duty for first-time buyers, rates for second homes and how it is paid

What is stamp duty?

In England and Northern Ireland you’re liable to pay Stamp Duty when you buy a residential property, or a piece of land, costing more than £125,000 (or more than £40,000 for second homes). 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.

Buy-to-let and second home Stamp Duty tax bands

Brackets

Standard rate

Buy-to-let/second home rate (1st April 2016)

Up to £125,000

0%

3%

£125,001 – £250,000

2%

5%

£250,001 – £925,000

5%

8%

£925,001 – £1.5m

10%

13%

over £1.5m

12%

15%

Source: HMRC

  

The tax is calculated on the part of the property purchase price falling within each band.

For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you owe is calculated as follows:

  • 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

 

Stamp duty Q&A

What if I own a property abroad and buy a second property in the UK?
Property buyers who own and reside in a property abroad i.e. France, but intend to purchase a second property in the UK are eligible to pay the new SDLT rates.  The definition of “main residence” will be based on fact (where you live) rather than subject to election, which differs from other taxes.

Are any types of properties exempt from this tax? 
Yes. Caravans, houseboats, mobile homes and properties under £40,000 are exempt from the higher rate of SDLT. The consultation says, ‘Transactions under £40,000 do not require a tax return to be filed with HMRC and are not subject to the higher rates.’ 

Potential exemptions

Married couples and civil partners

The consultation states that ‘the government will treat married couples and civil partners living together as one unit’. As such, married couples and civil partners who own one property at the end of the day of a transaction will not pay the higher rates of SDLT. However, if either of them owns more than one residential property both may pay the higher rates when purchasing another property.
Couples who are separated will be treated as “separate entities” in terms of property ownership

Purchasing a property for children

The Treasury outlines different structures of property transaction. If parents purchase a property for their children in their name and already own their home, they are eligble to pay higher SDLT as they will own two properties. However, if parents gift money towards a deposit but do not jointly own the property with their child, higher SDLT does not apply.

Multiple purchases

Large-scale investors will be liable for the additional charge. In the consultation document published after the initial announcement in November 2015, there was an indication that investors buying more than 15 units, or who had a portfolio of more than 15 units, could be exempted from the charge, but the Chancellor decided against this.

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