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What is stamp duty?
Stamp Duty and Land Tax is the tax that you need to pay if you buy a property over a certain price in England and Northern Ireland. In Scotland, it is called the Land and Buildings Transaction Tax and in Wales it is called the Land Transaction Tax.
The amount of this tax that you pay is a percentage of the purchase price of the property.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme buy a property through a shared ownership scheme are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
Do I Have to Pay Stamp Duty?
You will have to pay Stamp Duty if the property you buy is above a certain value. The Stamp Duty is different in different parts of the UK and we have summarised them below for you.
- England and Northern Ireland: It is called Stamp Duty Land Tax and is paid when you buy properties that have a value higher than £125,000.
- Wales: In Wales it is known as the Land Transaction Tax, and applies to properties over £180,000.
- Scotland: It is called Land & Buildings Transaction Tax and applies to properties over £145,000, or £175,000 for first time buyers. Until the 31st March 2021, this threshold for all home-buyers has been increased to £250,000. For purchase of additional properties, a Land & Buildings Transaction Tax is charged.
England, NI and Wales impose a 3% surcharge for additional properties like second homes and Buy to Lets.
Calculate Your Stamp Duty here?
Temporary Stamp Duty Holiday and Land Tax changes due to Covid19
The Governments of England and NI, Scotland and Wales have all announced temporary changes to the rates of Stamp Duty Land Tax (SDLT), Land & Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively. As a consequence, the nil rate band for home-buyers will increase until the end of March next year.
In England and Northern Ireland, the Stamp Duty Holiday has been announced from the 8th of July, 2020. This means that you don’t have to pay any Stamp Duty on properties of up to £500,000, as long as the transaction completes before the 31st March 2021. However, the usual surcharges will apply for purchase of additional properties.
In Scotland, the Land & Buildings Transaction Tax (LBTT) threshold has been temporarily increased to £250,000, for first time buyers as well as those purchasing their next home from the 15th July 2020. If you buy additional properties, you can still take advantage of this, although the surcharge will still be in effect.
In Wales, the Land Transaction Tax (LTT) threshold has been increased to £250,000 from the 27th July 2020 and will be in effect till the end of March 2021. The new limits for Wales don’t apply if you purchase additional properties, so the higher residential tax rates will still be applicable.
The important point to remember is that to be able to reap the benefits of the newly announced reduction in stamp duty, your purchase will need to be completed the 31st of March 2021.
Stamp duty threshold in England and NI (from 8th July 2020)
Property Value | Stamp duty rate | Additional property |
Up to £500,000 | 0% | 3% |
The next £425,000 | 5% | 8% |
The next £575,000 | 10% | 13% |
The remaining amount | 12% | 15% |
Stamp duty threshold in Scotland (from 15th July 2020)
Property Value | LBTT rate | Additional property |
Up to £250,000 | 0% | 4% |
The next £75,000 | 5% | 9% |
The next £425,000 | 10% | 14% |
The remaining amount | 12% | 16% |
Stamp duty threshold in Wales (from 27th July 2020)
Property Value | LTT Rate | Additional property |
Up to £180,000 | 0% | 3% |
The next £70,000 | 0% | 6.5% |
The next £150,000 | 5% | 8% |
The next £350,000 | 7.5% | 10.5% |
The next £750,000 | 10% | 13% |
The remaining amount | 12% | 15% |
Stamp duty threshold in England
Property Value | Stamp duty rate |
Up to £125,000 | Zero |
The next £125,000 | 2% |
The next £675,000 | 5% |
The next £575,000 | 10% |
The remaining amount | 12% |
Stamp duty for first time buyers in England and Northern Ireland
If you are buying your first property in England and Northern Ireland, you don’t have to pay stamp duty on the first £300,000 of the property price if you’re buying a home costing up to £500,000. You will then pay 5% stamp duty on the portion between £300,001 and £500,000, ie. On the £199,000. That means the stamp duty threshold for first-time buyers is as follows:
Property Value | Stamp duty rate |
Up to £300,000 | Zero |
The next £200,000 | 5% |
Standard stamp duty rates apply to first-time buyers buying properties worth more than £500,000. If you are buying jointly, then both you and your partner have to be first-time buyers, otherwise the standard stamp duty rates will apply.
These changes were announced in the 2017 Budget on November 22nd and were implemented immediately. The following year, in the 2018 Autumn Budget, the Stamp Duty relief also included first-time buyers of shared ownership properties. All properties already bought by first-time buyers under shared ownership schemes since 22 November 2017 qualify too, provided the value was £500,000 or under at the time of purchase.
If you do qualify for stamp duty relief on a shared ownership purchase made after 22 November 2017, you can claim a stamp duty refund by writing to the Stamp Duty Land Tax office. To learn more, visit the HMRC website.
If you buy a property in Northern Ireland, you will be paying the same stamp duty rates as in England, including the first-time buyer exemption on the first £300,000 of the property value.
Stamp duty in Scotland and Wales
Property Value | LBTT rate |
Up to £145,000 | Zero |
The next £105,000 | 2% |
The next £75,000 | 5% |
The next £425,000 | 10% |
The remaining amount | 12% |
If you are purchasing a property in Scotland, you’ll pay Land and Buildings Transaction Tax (LBTT) instead of stamp duty. Scottish buyers are not affected by changes to first-time buyer stamp duty rules in England. The following table shows the LBTT values:
Property Value | LBTT rate |
Up to £180,000 | Zero |
£180,001 to £250,000 | 3.5% |
£250,001 to £400,000 | 5% |
£400,001 to £750,000 | 7.5% |
£750,001 to £1.5m | 10% |
£1.5m+ | 12% |
In Wales, under the Welsh government’s Land Transaction Tax (LTT), which replaced stamp duty in April 2018, there is no LTT to pay for all buyers purchasing homes costing up to £180,000.
We have summarised the LTT rates and bands in Wales below:
Property Value | LBTT rate |
Up to £180,000 | Zero |
£180,001 to £250,000 | 3.5% |
£250,001 to £400,000 | 5% |
£400,001 to £750,000 | 7.5% |
£750,001 to £1.5m | 10% |
£1.5m+ | 12% |
What Stamp duty will I Pay on My second home?
If you already own one property and are in the process of purchasing another, either as an investment or as a second home, you will typically pay 3% on top of the normal stamp duty rates in England, Wales and NI or 4% in Scotland. This is a surcharge and will be in force even if your first property is outside the UK.
If you purchase a house for your child, and are named on the deeds of the property, whilst already owning a property, the surcharge will be payable.
However, If you already have a Buy to let property, and are selling your main home and buying a new main residence for you to live in, you will not have to pay the surcharge.
If you complete on your new property whilst you still own your old home you will have to pay the surcharge. However, if you sell your old home within 36 months you can reclaim the extra tax.
What will my Stamp duty be if I Buy a new build property?
When you purchase a new build property, you will pay Stamp Duty on the value of the property as well as the non-removable goods in the property, like the kitchen fittings and fitted wardrobes.
You will not have to pay Stamp Duty on removable items like carpets, curtains and furniture.
What Stamp duty Will I Have to Pay on shared ownership properties?
When you buy a shared ownership property, you can choose to pay Stamp duty on only the share you are buying. If there is a chance that you will buy more shares in the future, you can pay stamp duty on the full purchase price.
When I Have to Pay Stamp Duty?
The Stamp Duty must be paid within14 days from the date of completion of your purchase.
Usually your conveyancing solicitor will handle the payment of the Stamp Duty for you and they should inform you that they are doing it or have done it. If you do not pay the Stamp Duty on time, you could receive a penalty and also have to pay interest on top.
Am I Exempt from Having to Pay Stamp Duty?
There are a few instances where you are exempt from having to pay Stamp Duty. We have made a list for you below:
- When you receive the property as a gift
- If you have been left the property in a will
- In case of a divorce or separation, where your partner is transferring their share of the property to you.
- If you buy a freehold property for less than £40,000