|Effective Rate = 0%|
|Tax Band||%||Taxable Sum||Tax|
|Less than £425,000||5|
|Between £425,000 and £625,000||5|
|Between £625,000 and £925,000||5|
|£925,000 to £1.5 Million||10|
|Over £1.5 Million||12|
Stamp Duty Land Tax or SDLT dates back to the end of the 17th century and is a tax charged on property purchased in England and Northern Ireland.
This tax is owed when:
Note that Wales has its own form of stamp duty called the Land Transaction Tax (LTT). Scottish residential property buyers also pay the Land and Buildings Transaction Tax (LBTT). There are also different stamp duty rates for commercial property purchases and for those that are non-UK residents.
Stamp duty charges vary according to the purchase price of the property. There is a series of tax bands with rising rates – meaning that the lower the buy price, the lower the tax will be.
Since late 2014, the calculation changed from being a “slab tax” – where each price bracket had its own associated applicable percentage charge – to an “incremental” structure. This essentially means that the stamp duty is effectively split out as the purchase price point increases above each threshold.
Stamp duty land tax regimes can be changed by the Chancellor of the Exchequer as part of budget announcements. In 2017, for example, Philip Hammond introduced first-time buyer stamp duty relief.
This can occur in a “mini” form, such as in September 2022, where the former (and temporary) Chancellor Kwasi Kwarteng announced such changes to the thresholds. These remained when current Chancellor Jeremy Hunt took over leadership of the Exchequer.
There are also “emergency” budgets – where more radical decisions regarding stamp duty are made. The most recent example was during the COVID pandemic where property buyers under certain thresholds did not have to pay any SDLT under what was named the “stamp duty holiday”.
Aimed at boosting the house sales market, SDLT rates were revised on 23rd September 2022, as shown in the table below:
Despite criticism of misplaced priorities, the stamp duty updates benefit home buyers in the following ways:
|Tax Band||Normal Rate||Additional Property|
|Less than £250,000||0%||3%*|
|£250,000 to £925,000||5%||8%|
|£925,000 to £1.5 Million||10%||13%|
|Rest over £1.5 Million||12%||15%|
To boost efficiencies in the tax collection system, since March 2019, stamp duty payment was required within 14 days after completion day. This was reduced from 30 days previously.
The solicitor / conveyancer will submit an stamp duty return to HM Revenue and Customs on behalf of the buyer in good time.
Since April 2016, property buyers acquiring second properties such as buy-to-let investments or holiday homes are required to pay a 3% stamp duty surcharge on the purchase price (i.e. on top of the existing rate).
The stamp duty calculator above shows how much of the surcharge will be owed depending on the property price threshold.
With housebuilding volumes still lagging, it’s arguable that the government’s aim was to discourage second home buying.
Helping first time buyers by charging a standard level of tax is aimed at creating more of a level playing field.
If you have not sold the property that is your main residence on the day you complete on the purchase of another property, you will still have to pay stamp duty.
However, you can apply for a refund if you sell your property that was your main home within 36 months. Note that you should not let the property as that could affect your ability to get the refund.
It may be possible to get a refund of the 3% surcharge provided that you can prove that there were exceptional circumstances that prevented you from selling.
You will need to get in touch with the HMRC to provide your full details alongside:
Property buyers that are outside of the UK for 183 days or more during 12 months before the purchase are not deemed to be a resident of the country.
In these scenarios, there will typically be a 2% surcharge on the property’s purchase price – bar the following circumstances:
If you are married or in a civil partnership, and one of you is a UK resident whilst the other is abroad, then both partners get the same tax treatment. Note you will have to be buying the property together.
It’s worth noting the different rules and rate calculations that apply.
Companies, partnerships and collective investment schemes pay stamp duty at 15%.
The purchase will be exempt from this charge if the property is bought under the following conditions:
Non-residential or mixed-use properties are subject to incremental stamp duty proportions when the sales value is £150,000 and over.
Stamp duty will also be charged on lease premiums and transfers as shown in the table below:
|Property / Lease Premium or Transfer Value||Stamp Duty Rate|
|Up to £150,000||0%|
|The Next £100,000 (the Portion from £150,001 to £250,000)||2%|
|The Remaining Amount (the Portion Above £250,000)||5%|
When purchasing a non-residential property or one with both commercial and residential elements, how much stamp duty owed is based on:
|Net Present Value of Rent||Stamp Duty Rate|
|£0 to £150,000||0%|
|The Portion from £150,001 to £5 Million||1%|
|The Portion Above £5 Million||2%|
Properties purchased through an approved public body (such as a shared ownership scheme, housing association or local housing authority) stamp duty will still be owed.
A “linked” purchase is one where 2 or more property transactions (such as a portfolio sale) involve the same buyer and seller.
The buyer pays SDLT on the gross value of the linked transactions. This could result in paying a higher rate of tax compared to buying the properties individually.
There are specific rules that govern the amount of stamp duty payable on specific company and trust-related property sales.
It’s worth being aware of the scams out there.
HM Revenue and Customs have, for example, warned against so-called “tax repayment agents”. The ploy involves contacting recent homebuyers and promising rebates on overpaid stamp duty in return for a fee.
If you receive such a call, email or text message, be sure to contact your conveyancer who can verify the details. Although such scenarios rarely occur, it’s often a case of dealing with HMRC directly who will not charge any fees.