If you’re buying a home in England or Northern Ireland and paying more than £125,000, you will have to pay Stamp Duty Land Tax (SDLT) or more than £40,000 for second homes. This tax applies to both freehold and leasehold properties and whether you are buying outright or getting a mortgage.
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
Government rates of Stamp Duty are, at first glance, fairly simple, although different types of ownership will incur their own unique charges. The most straightforward cost when moving home is for those residential buyers simply changing their only home. The cost of Stamp Duty for first time buyers also differs, depending on the value of the property. Stamp Duty rates begin at 2% of the price on properties selling for anything above £125,000, rising to 5% on the next £675,000, 10% of any further £575,000 and 12% on any price above £1.5 million.
Minimum property purchase price
Maximum property purchase price
Stamp Duty rate (only applies only to that part of the property price that falls within each band)
The government rules become a little more complicated for those buying an additional property, either for buy-to-let, a holiday home or family reasons. There are separate rules for what is termed ‘non-residential and mixed use land’, which includes commercial property such as retail units and offices, land used for agriculture and forestry, any non-residential land or six or more residential units that are bought in one transaction.
Mixed use refers to any property that falls into both of the above categories, both residential and non-residential, such as flats above shops or other commercial property. The threshold for these types of property begins at £150,000: between £150,000 and £250,00, the Stamp Duty rate is 2%, and any amount above £250,000 incurs a charge of 5%.
The value of the property is also known as the ‘consideration’, and in the majority of cases is the amount that is paid, although payment may include other various factors. These can include transfer of or release from a debt, which may take into account the value of any mortgage outstanding, services or work or any associated goods.
In some cases, it may be possible to claim relief from SDLT. There are many situations where it is possible to make a claim, such as:
Purchase of multiple dwellings
A home bought by a building company
An employee’s home bought by his or her employer
A property bought by a local authority as a compulsory purchase
Transfer of a property from one company to another
Charities, right-to-buy or registered social landlords.
Anyone buying a property for whatever amount, even it is below the threshold, must fill in and send an SDLT return and pay the tax within 30 days of their completion date. Some buyers may be able to complete the paperwork themselves, but in the majority of cases it is advisable to leave this in the care of an experienced conveyancing solicitor.
Can I claim back stamp duty?
You can apply to HMRC for a refund of the additional rate of stamp duty if you sell your previous home within 3 years of your paying the higher rate of Stamp Duty (must be your main residence). You can do this via the HMRC website.
Stamp Duty in Scotland
While home-buyers in England, Wales and Northern Ireland are liable for Stamp Duty Land Tax (SDLT), in Scotland the situation is slightly different, although basically the same as in the rest of the UK. North of the border, the duty is known as Land and Buildings Transaction Tax (LBTT), which, as with the rest of the country, is linked to purchase prices.
For a main residence, and the owner’s only property, the rate of Stamp Duty in Scotland is:
Less than £145,000 – 0
Between £145,000 and £250,000 – 2%
Between £250,000 and £325,000 – 5%
From £325,000 to £750,000 – 10%
Over £750,000 – 12%
For any additional property, including holiday homes and buy-to-let properties, the surcharge is 3% below £145,000 and progressively charged at 5%, 8%, 13% and 15%. This is known as the LBTT Additional Dwelling Supplement (ADS). As is the situation in the rest of the UK, the additional surcharge is designed to help first-time buyers enter the property market. If the Scottish government didn’t follow the UK government in introducing the surcharge, it would make the country much more attractive to buy-to-let companies and reduce the available housing stock for first-time buyers, especially at the lower end of the scale.
Our Stamp Duty Calculator Is Simple To Use
To use, all you need to do is input the price of either your main property, or an additional property, and we will give you the new cost in seconds.
Our expert legal panel, made up of UK regulated solicitors and licensed conveyancers, can provide you with a fast efficient fixed fee online conveyancing service to help you to make your home buying or selling a simple and easy process.