What is stamp duty?

If the property you are buying is worth more than £125,000 then you will have to pay Stamp Duty Land Tax (SDLT).

What is stamp duty payable on?

Stamp duty is payable on both freehold and leasehold properties costing in excess of £125,000.

First time buyers do not need to pay SDLT on properties worth £300,000. Over that you would pay SDLT. So if your property is worth £400,000, you would pay stamp duty on the remaining £100,000. As of October 2018, first-time buyers under Shared Ownership schemes can now claim First-Time Buyers SDLT relief on homes worth up to £500,000. This change applies to homes purchased on or after 22 November 2017.

SDLT for new build properties is also the same but some builders may offer you an incentive by contribution toward the cost.

On shared ownership properties stamp duty can vary; you can opt to pay Stamp duty just on your percentage or on the full purchase price if you are likely to purchase a greater percentage in the future.

 

How is stamp duty calculated?

The amount of SDLT you pay is based on a percentage as follows;

Purchase PriceStamp Duty %
Upto £125,0000%
The next £125,000 (the £125,001 to £250,000 portion)2%
The next £675,000 (the £250,001 to £925,000 portion)5%
The next £575,000 (the £925,001 to £1.5m portion)10%
The remaining portion (above £1.5m)12%

 

These rates apply to property purchased in England, Wales and Northern Ireland.

If you already own a property a main residence and are purchasing an investment property (buy to let, holiday let, property for family member) you will have to pay an additional 3% surcharge.

Stamp duty exemptions

There are some scenarios in which SDLT does not apply;

  • Where one partner transfers the equity to the other for example during divorce or separation
  • First time buyers where property is worth £300,000 or under
  • If the property is gifted
  • If the property is received through inheritance or in a will
  • If the property is freehold costing less than £40,000

 

Is stamp duty different in Scotland?

In Scotland, property purchases are liable for Land and Buildings Transaction Tax (LBTT);

Purchase PriceLBTT %
Upto £145,0000%
The next £105,000 (the £145,001 to £250,000 portion)2%
The next £75,000 (the £250,001 to £325,000 portion)5%
The next £425,000 (the £325,001 to £750,000 portion)10%
The remaining portion (above £750,000)12%

 

As in England there is an additional surcharge on second homes purchased in Scotland.

Think carefully before securing debt against your home, your home may be repossessed if you do not keep up repayments on your mortgage.