What is Stamp Duty?

What is it?

Stamp Duty Land Tax is a tax you pay to the government when you buy a property. The amount you pay depends on the value of the property.

Stamp Duty Holiday 2020

As of 8th July 2020 the Chancellor announced a Stamp Duty exemption for all properties in England and Northern Ireland up to the value of £500,000 up until the end of March 2021. For second homes or Buy to Let properties, there will be a discount, where only 3% Stamp Duty is payable up to the first £500,000. Above that amount, the usual percentage applies.

Similarly, in Scotland the threshold for paying Land & Buildings Transaction Tax was raised from £145,000 to £250,000 on Wednesday 15 July. The rates and thresholds above this figure remain unchanged. The higher threshold will remain in place until 31 March 2021.

Our Stamp Duty Calculator takes these updates into account.

What are the rates?

Stamp Duty is sorted into bands – you pay a percentage on the amount of the property that falls within that band. The more expensive a property is, the more bands it covers.

Purchase price bands (£) Percentage rate (%)
Up to £500,0000%
£500,000 to £925,0005%
£925,001 to £1,500,000 10%
Above £1,500,000 12%

Example:

If you bought a property worth £550,000, and the remainder would be taxed at 5%. This means your Stamp Duty would be £0 (0%) plus £2,500 (5%) = £2,500 (it would be £17,500 without the stamp duty holiday.)

Second properties and buy-to-let properties

If you are buying a second property, or a buy-to-let property, you will pay a higher rate of Stamp Duty.

Purchase price bands (£) Percentage rate (%)
Up to £500,0003%
£500,000 to £925,0008%
£925,001 to £1,500,000 13%
Above £1,500,000 15%

When do you pay it?

You pay Stamp Duty Land Tax if you are purchasing a property in England or Northern Ireland. Scotland and Wales have equivalent systems with different names and rates.

When don’t you pay it?

You don’t pay Stamp Duty if your property is under the threshold, so under £500,000 you would pay no Stamp Duty.

First time buyers and Stamp Duty

Please note: as of 8th July 2020 all property purchases (excluding second homes/Buy to Let) will be Stamp Duty exempt until 31 March 2021. This applies to First Time Buyers and those who have owned properties before. After 31st March, we expect this to revert back to the £300,000 limit for First Time Buyers, outlined below.

As of November 2017, first time buyers in England get a Stamp Duty exemption. This means that if you are a first time buyer and your property costs up to £300,000, you will not pay any Stamp Duty at all. If you are a first time buyer and your property is up to £500,000, you’ll pay 5% on the amount over £300,000 but under £500,000.

First time buyers buying a property over £500,000 will not be eligible for exemption.

There are a few rules to qualifying as a first time buyer for the exemption:

  • Does not own another property and never has owned one before (including abroad, inheritance etc)
  • If buying with another person, both have to be first time buyers to get the discount
  • You can own commercial property

Previously, this exemption didn’t fully apply to those using a Shared Ownership scheme, but this changed in November 2018.

First time buyers in Scotland get an exemption on properties up to the value of £175,000. If the property is more than that, they’ll get 0% up to £175,000 and then pay the regular amount on the rest of the property.

First time buyers in Wales do not have an exemption as the threshold is higher, and property prices in Wales are lower are general. The majority of first time buyers buy below the threshold.

How do you pay it?

Your Stamp Duty is paid to the HMRC when your purchase goes through. It must be paid within 14 days of the purchase. Usually, your conveyancing solicitor or licensed conveyancer will deal with this for you, as part of their service. You will receive a receipt for the payment.

Scotland and Wales

Scotland and Wales are responsible for their own property purchase taxes. They work in the same way as Stamp Duty, but they are controlled by their own treasuries and have different bands/rates.

Scotland has the Land and Buildings Transaction Tax (LBTT).

The 0% rate goes up to properties worth £250,000 (reverting to £145,000 on 1 April 2021), and highest rate (12%) is applied on properties over £750,000. The rest of the bandings are the same:

Purchase price bands (£) Percentage rate (%)
Up to £250,000 0%
£250,001 to £325,000 5%
£325,001 to £750,000 10%
Above £750,000 12%

Second homes in Scotland incur a 4% surcharge. So properties under £145,000 will be charged 4% and it increases in tax bands.

Purchase price bands (£) Percentage rate (%)
Up to £250,000 2%
£250,001 to £325,000 9%
£325,001 to £750,000 14%
Above £750,000 16%

In Wales you pay Land Transaction Tax and the rates are slightly different from both Scotland and England.

Purchase price bands (£) Percentage rate (%)
Up to £180,000 0%
£180,001 to £250,000 3.5%
£250,001 to £400,000 5%
£400,001 to £750,000 7.5%
£750,001 to £1,500,000 10%
Above £1,500,000 12%

Stamp Duty Calculator

If you want to quickly calculate the Stamp Duty (Or LLT, or LBTT) you need to pay, use our easy Stamp Duty Calculator.