If you’re interested in buying a property in England or Northern Ireland, and want to learn more about stamp duty land tax, then you’re in the right place.
In this article, we guide you through the ins and outs of Stamp Duty Land Tax in England or Northern Ireland, including how we can support your purchase.
What is stamp duty land tax?
Stamp Duty Land Tax (SDLT), often also simply referred to as stamp duty, is a form of tax that you might have to pay when you buy land or a property over a certain price in England and Northern Ireland.
How do I know how much stamp duty to pay?
The rates are – when necessary – revised and updated by the Government, with the current stamp duty rates* and thresholds being:
|
Price threshold for property & land
|
SDLT rate
|
| up to and including £225,000 |
0% |
| The next £675,000 (the portion from £275,001 to £925,000) |
5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) |
10% |
| over £1,500,000 |
12% |
Source: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates (08/2023)
You can use
HM Revenue and Customs’ (HMRC) stamp duty calculator to work out exactly how much you would need to pay, as properties of different values fall within different Stamp Duty Land Tax rate bands.
To pay your Stamp Duty Land Tax, you need to complete a return and have 14 days to pay the amount upon completion of the form. This is usually filed and completed by your conveyancer/property lawyer, who will keep you informed every step of the way to ensure everything is paid on time. Want to know more about our conveyancing services? Find out more
here.
Do you pay stamp duty as a first-time buyer?
If it’s your first property purchase, you may not have to pay stamp duty. As a first-time buyer, you can qualify for stamp duty relief, if the property you’re buying costs less than £425,000 or receive a discounted rate on properties worth up to £625,000**.
Stamp duty on additional properties
If you’re in the market for a second home, you must pay an additional 3% in stamp duty on top of the standard stamp duty rates, except for if the new property replaces your first property as your main home. Should you complete the purchase of your new property before you’ve sold your previous one, you will have to pay the additional 3%, as you would then own two properties.
These are the rates for second homes in England and Northern Ireland:
|
Price threshold for property & land
|
SDLT rate + 3%
|
| up to and including £225,000 |
0% + 3% = 3% |
| The next £675,000 (the portion from £275,001 to £925,000) |
5% + 3% = 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) |
10% + 3% = 13% |
| over £1,500,000 |
12% + 3% = 15% |
For example, if the second home you’re buying costs £500,000, then the stamp duty you pay is £27,000:
- On the first £250,000 you pay 3% (£7,500)
- On the rest of the £250,000 you pay 8% (£20,000)
- Total Stamp Duty Land Tax to pay is £27,500:
- £7,500 + £20,000 = £27,500
However, if you sell your previous home within 36 months of buying your new property, you can apply for a refund. Even if your sale takes longer than 36 months, reclaiming stamp duty can be done by writing to HMRC and explaining your circumstances.
Certain special rates also apply to non-UK residents, corporate entities, purchasing more than six residential properties in one transaction, shared ownership properties or linked purchases.
Want to sell before buying? Find out how much you could sell for with a free expert valuation. Book your valuation today.
How much is stamp duty on a buy-to-let property?
If you plan on buying a second property and renting it out, you will have to pay the additional stamp duty rate for owning another property. Such property purchases fall under the same stamp duty regulations as second homes.
When is stamp duty not payable?
In some rare cases, stamp duty may not be payable. Exceptions may include:
- When a property is gifted and the mortgage has been paid off in full. If there still is a mortgage to pay off, the person accepting the gifted property may have to pay stamp duty on the mortgage value.
- Properties passed on in a will may also be exempt from stamp duty.
- When a property is transferred from one person to another during a separation or divorce, are often exempt. However, if the separation takes place without a court order, stamp duty may be payable.
What are stamp duty holidays?
In certain special circumstances, such as the COVID-19 pandemic, stamp duty holidays are introduced where special rates are applied to the purchase of residential properties.
Regional differences
One thing to keep in mind is that in both Scotland and Wales, this tax is calculated at a different rate and it also has slightly different names.
In Scotland, the equivalent is called Land and Buildings Transaction Tax (LBTT) for which you can find out more here.
For Wales, you’ll find more information on their Land Transaction Tax (LTT) here.
