Confused about what Stamp Duty you need to pay on your property purchase? Here, our guide to Stamp Duty outlines exactly what you need to pay if you're buying your new home or rental property.
What is Stamp Duty?
Stamp Duty (or Stamp Duty Land Tax as it is officially known) is the tax you pay when you buy a property (or land) in England, Wales or Northern Ireland for more than £40,000.
Does it apply to freehold and leasehold properties?
Yes –
Stamp Duty is payable whether you buy a freehold property, a new or existing leasehold property, or through a shared ownership scheme.
Does it apply to residential and commercial properties?
Yes –
The amount of tax you pay depends on both the purchase price and the type of property (or land) you buy. The property categories are:
- Residential
- Non-residential or mixed use
Stamp Duty must be paid to HMRC within 30 days of completing the purchase of the property, along with an SDLT return.
Where a solicitor, agent or conveyancer is dealing with your purchase, they will usually fill this in and make the payment on your behalf.
How much Stamp Duty will I pay?
This will depend on whether you are replacing your main home, or if you are buying an additional residential or commercial property for rental purposes. Use our Stamp Duty calculator to see exactly how much you will pay.
Main home
When replacing your main home, the following rates apply:
| Price Range | SDLT Rate |
|---|---|
| £0 - 125,000 | 0% |
| £125,001-250,000 | 2% |
| £250,001-925,000 | 5% |
| £925,001-1,500,000 | 10% |
| £1,500,001+ | 12% |
These rates are applied proportionately.
So, for example, if you buy a house for £256,000;
- The first £125,000 will not be taxed
- The next £125,000 (£125,001-£250,000) will be taxed at a rate of 2%
- And the final £6,000 (£250,001-£256,000) will be taxed at a rate of 5%
The combined total (£2,500 + £300 = £2,800) is the Stamp Duty you will pay.
First-time buyers
The Stamp Duty rates for first-time buyers should be applied as such:
| Price Range | SDLT Rate |
|---|---|
| £0 - 300,000 | 0% |
| £300,001-500,000 | 5% |
For any property above £500,000, the standard rates will apply.
Buy-to-let property
Changes to the Stamp Duty on rental properties made by the government came into effect in April 2016.
If you buy a residential property and you already own one (or more) properties anywhere else in the world, you will have to pay an additional 3% Stamp Duty charge.
The proportionate rates in this instance are:
| Price Range | Additional Property Stamp Duty Rate |
|---|---|
| £0 - 125,000 | 3% |
| £125,001-250,000 | 5% |
| £250,001-925,000 | 8% |
| £925,001-1,500,000 | 13% |
| £1,500,001+ | 15% |
NOTE: The additional 3% charge is not applicable to purpose-built student accommodation.
We've also got a landlord taxes resource for those of you wondering, "if I rent my house out do I pay tax?"
Non-residential or mixed-use property
Non-residential properties include:
- Commercial property
- Farm land
- Any land and property not used as a residence
Mixed-use properties are ones that are both residential and non-residential, e.g. a shop with a flat above it.
The rates you pay when you buy a non-residential property are as follows:
| Price Range | SDLT Rate |
|---|---|
| £0 - 125,000 | 0% |
| £125,001-250,000 | 2% |
| £250,001+ | 5% |
Leasehold property
If you buy a leasehold residential property, you will have to pay Stamp Duty on the purchase price of the lease.
There may be additional charges if the lease purchased is unassigned (i.e. new), and there is rent to pay over the life of the lease.
Stamp Duty reliefs
In certain circumstances, there are reliefs available that will reduce the amount of Stamp Duty you have to pay.
Examples of two available reliefs include:
- Multiple dwellings relief
This can be claimed where more than one property is being bought in a linked transaction. For example, where a number of flats are in the same building.
In this scenario, the Stamp Duty is payable based on the rate that applies to the average price per dwelling, rather than the rate for the total combined value.
- Registered social landlords
Full relief may be available where the purchaser is a registered social landlord and the vendor is a qualifying body.
There are a number of other reliefs, and advice should be taken in order to consider whether you will qualify.
Stamp Duty exemptions
In some circumstances, Stamp Duty is not payable and there is no need to file a return. Examples include:
- Where money or other consideration isn’t given in exchange for the transfer of property (or land)
- A property is left to you in a will
- A property is transferred to you because of divorce or dissolution of civil partnership
- The property you have bought has a value of less than £40,000
- You use alternative property financial arrangements, e.g. in accordance with Sharia law
Discover more...
Check out our blog for more articles related to buying a property and other government legislation.
*Foxtons have consulted a firm of tax advisers with regards to the content. However, this publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, neither Foxtons, or their tax advisers, accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
