Stamp Duty

Overview

Generally SDLT is due on the purchase or transfer of property or land in the UK where the amount given is above a certain threshold. Most UK land and property transactions must be notified to HM Revenue and Customs (HMRC) on an SDLT return within a certain time limit - even if no tax is due.

Various rules apply for working out how much, if any, SDLT is payable. The calculation, based on a value called the 'chargeable consideration', can vary depending on whether the land is:

  • residential or non-residential
  • freehold or leasehold
  • other factors such as whether several transactions are linked

The Change

Under the old rules, you would have paid tax at a single rate on the entire property price. As of the 4th December 2014 and SDLT rates introduced on 1st April 2016, you will only pay the rate of tax on the part of the property price within each tax band – like income tax (unless you are a first time buyer of which you will follow different rules). Under the old rules if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules, for the same property you'll pay nothing on the first £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.
Note: you must still send an SDLT return for transactions under £125,000 unless they’re exempt.

Purchase price of property (£) New rates paid on the part of the property price within each tax band
0 - 125,000 0%
125,001 - 250,000 2%
250,001 - 925,000 5%
925,001 - 1,500,000 10%
1,500,001 and over 12%

You can also use the above table to work out the SDLT for the purchase price of a lease (the ‘lease premium’).

Paying

You will need to submit a Stamp Duty return and pay what you owe within 30 days of completion. If you do not pay within the 30 days you will incur a £100 penalty plus interest.

You're still required to submit a return even if the price of your new home falls between £40,000 and £125,000 and you're not required to pay Stamp Duty.

First Time Buyers

If you’re a first time buyer and the purchase price is £500,000 or less then you must abide by different rules. These rules will see purchasers have the ability to claim a discount (relief) on a purchase price up to £300,000 where you won’t have to pay any tax. Anything from £300,001 to £500,000 you will have to pay 5%.
Eligible buyers must meet the following:
            - All parties involved in the purchase must be a first-time buyer
            - You must complete your purchase on or after 22nd November 2017
If you are however a first time buyer but the price of the property is over £500,000 then you must follow the rules for people who have bought a home before.

Purchasing Additional Properties

For any additional property that you purchase that results in you owning more than one home will mean you incur an additional 3% on top of the normal SDLT rates.
However if you exchanged contracts before 26th November 2015 you may not have to pay the higher rates.

Replacing your Main Residence

If the property you’re buying is to replace your main residence and that has already been sold then you won’t have to pay the extra 3% SDLT. If for any reason there is a delay in selling your main residence at the time of completion on your new purchase then you will have to pay a higher rate because you own more than one property. However if you do manage to sell your previous main home within 36 months then you may be able to get a refund.

In some situations there are special rules that will apply.

Tax Calculator

To calculate the tax payable on either your first home or your second, you can use the Stamp Duty Calculator provided by HMRC.