What is Stamp Duty?
In England & Northern Ireland you are taxed when you buy a residential property, or a piece of land, costing more than £500,000 (or more than £40,000 for second homes), this is called stamp duty. The UK Government have on 8th July 2020 introduced a temporary SDLT discount whereby first time/main home buyers now pay zero stamp duty on purchases up to £500,000. This will expire and return to the previous rates on 31st March 2021.
Stamp duty tax applies to freehold and leasehold properties, regardless of buying outright or with a mortgage. Buying a property in Scotland? you pay Land and Buildings Transaction Tax (LBTT), in Wales: Land Transaction Tax (LTT) instead of Stamp Duty. UK Gov website source
How is stamp duty calculated?
There are several rate bands for Stamp Duty. Similar to PAYE taxation, stamp duty is calculated by dividing the property sale price into tiers, each tier's taxation rate increases into higher rate bands as the property/land value increases.
First time buyers
First time buyers in England or Northern Ireland will pay no Stamp Duty on properties worth up to £500,000. To qualify you must be purchasing your only or main residence and have never owned a freehold previously in the UK or overseas.
If you are a first time buyer and the property purchased is over £500,000, the standard stamp duty rates apply and you will not qualify for first time buyers tax relief.
Second homes / buy to let
Purchases of additional residential properties: second homes and buy-to-let properties pay an extra 3% in stamp duty on top of standard rates for each tier. The additional rate applies to purchases of £40,000 or more. Caravans, mobile and motorhomes are not included.
In the situation you end up owning two properties, such as a delay in selling a previous residence, then the higher stamp duty rates apply. You can however apply for a refund of any additional tax you would have had to pay, providing you sell the previous main residence within 3 years and apply for the refund within 3 months of the previous main residence's sale.
2024 Stamp Duty (SDLT) rates
Standard SDLT rates will apply to anyone purchasing property who doesn't fall into the first-time buyer or second home/buy to let categories.source
The standard rates are as follows:
£0-£500,000 = 0% tax
£500,001 - £925,000 = 8% tax
£925,001 - £1.5m = 13% tax
£1.5m+ = 15% tax
These rates apply only to the part of the property price falling into each tier, so for example a property costing £900,000 would be taxable as follows:
£0 on the first £500,000 (0%)
£20,000 on the remaining £400,000 (8%)
In the situation you end up owning two properties, such as a delay in selling a previous residence, then the higher stamp duty rates apply. You can however apply for a refund of any additional tax you would have had to pay, providing you sell the previous main residence within 3 years and apply for the refund within 3 months of the previous main residence's sale.
When does Stamp Duty have to be paid?
Payment is usually made within 30 days of completion of a property. The paperwork for this is normally handled by your solicitor or conveyancer.
