What is Stamp Duty Land Tax / Stamp Duty Tax?
Stamp duty land tax replaced the formerly known ‘Stamp Duty’ in 2003. Stamp Duty is a tax that you may have to pay if you buy a property or piece of land in England and Northern Ireland (Scotland and Wales have slightly different schemes but the principles remain the same), as it is a tax you must pay Stamp duty land tax (SDLT) the amount varies and is dependant on the value of the property or land. The amount payable will also vary depending on whether or not you are a first-time buyer and whether you already own property, a non-UK residence as well as a few other factors.
Almost everyone who purchases a property above £125,000 will have to pay stamp duty on the purchase, the amounts are broken down into different brackets as the value increases so does the amount of tax. There are a number of exceptions however, these depend on what type of buyer you are, for example, if you’re a first-time buyer you’re exempt up to £300,000.
If any of the below relate to your circumstances, then you will pay normal stamp duty:
You purchase a main or second residential property.
If you purchase a buy-to-let property or a piece of land worth more than £250,000.
When you purchase a new main residential property to replace your previous one, even if you sold your previous property and rented or lived with friends and family before buying a new property.
You buy a property with your marital partner and only one of you is a first-time buyer or you buy a property with shared ownership.
If you’re a first-time buyer and the property is valued above £300,000.
If you purchase non-residential property or mixed-use land above the value of £150,000.
If you have been added to the mortgage or deeds of a property as this is considered as ‘buying’ a share of property or land.
Breaking Down Stamp Duty Land Tax Rates
As mentioned above the rate of stamp duty land tax you will pay is defined by certain aspects, the rates and bands set by HMRC have been put into the tables below.
If you’re buying a main residence and you’re a previous/current homeowner the rates below apply:
Property Value | SDLT Rate |
Up to £125,000 | 0% |
Up to £250,000 | 2% |
£250,001 - £925,000 | 5% |
925,001 - £1,500,000 | 10% |
£1,500,001 and above | 12% |
Stamp Duty Rate if you are NOT a first-time buyer:
If you’re buying a second property (rental property or holiday home etc.) the following rates apply: This is also the same rate that would apply if you purchase a property for buy-to-let.
Property Value | SDLT Rate |
Up to £125,000 | 3% |
£125,001 to £250,000 | 5% |
£250,001 to £925,000 | 8% |
925,001 to £1,500,000 | 13% |
£1,500,001 and above | 15% |
Stamp Duty Rates if you’re buying a second residence or holiday home.
If you’re buying a main residence and you’re a first time buyer the rates below apply:
However, if you’re purchasing a property that is more than £300,000 you will only pay stamp duty on anything after the £300,000, for example the property cost £400,000 you’d only pay the 5% on the £99,999.
Property Value | SDLT Rate |
Up to £300,000 | 0% |
£300,001 to £500,000 | 5% |
Stamp Duty Rates for First-Time Buyers.
If you’re buying a Non-residential property (restaurants, shops etc.) / mixed-use land the following rates apply:
Property Value | SDLT Rate |
Up to £150,000 | 0% |
£150,001 to £250,000 | 2% |
From £250,001 upwards | 5% |
Stamp Duty Land Tax for non-UK residents
If your a non-UK resident and you are purchasing a residential property in England or Northern Ireland, you might have 2% on top of the existing Stamp Duty rates for any property that costs more than £40,000.
Exceptions to Paying Stamp Duty Land Tax
As mentioned before if you’re a first time buyer and the property you’re purchasing is less than £300,000 then you wont have to pay anything. There is also no stamp duty due from anyone if the property is worth less than £40,000, and the additional stamp duty rate does not apply if it is a Caravan, mobile home or houseboat. Finally if you purchase a buy-to-let property and it is the first and only property you own, you will be exempt from paying stamp duty. You can find out more about stamp duty land tax relief on our blog post.
HMRC classifies properties with annexe’s and granny flats as multiple dwellings, so if you’re buying a property with an annexe then you will be charged as if you were buying two properties, you’d be charged the additional 3% surcharge on Stamp Duty Land Tax. However, relief is available on these purchases this is known as Multiple Dwellings Relief (MDR), the main property has to be worth 2/3 of the total price paid for both dwellings to qualify.
Stamp duty can also be not payable in certain circumstances for example after a divorce or separation when transferring the property to your spouse or partner, you will not have to pay Stamp Duty when transferring over a portion of the home’s value to them. Another exemption would be when transferring deeds, if you transfer the deeds of your property to someone else either as a gift or in your will, they are exempt from paying Stamp Duty on the market value of the property. However, you can’t swap properties with another person, as you will both have to pay stamp duty on the property you receive which is calculated from it’s market value.