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UK Property Stamp Duty and Buy-To-Let Stamp Duty Tax

How much stamp duty will you have to pay when buying a property?

Find out who and when to pay as well as how much you'll need to set aside to complete a property transaction.

Visit the Government Stamp Duty Land Tax calculator to find out how much you'll pay.

What are changes to UK Stamp Duty?

Stamp Duty Land Tax (SDLT) is a progressive tax paid when purchasing a freehold, leasehold or shared ownership residential property over £125,000 in England, Northern Ireland and Wales (separate Land and Buildings Transaction Tax in Scotland). New SDLT rates were introduced in 2014's Autumn Statement, introducing a sliding system based on thresholds and dependent on a property price.

How has UK Stamp Duty changed since 2014?

Before 2014 a 'slab structure' was in place with buyers paying a rate based on the ENTIRE property purchase price. The new rates are now payable only on the PORTION of a property price which falls within each band. As with every tax, there are those who will be better and worse off compared to the previous system.

Stamp Duty Tax Rates as of December 2014
Brackets Rate
£0-£125,000 0%
£125,001-£250 2%
£250,001-£925k 5%
£925,001-£1.5m 10%
£1.5m+ 12%

Source: HMRC

How to calculate the new Stamp Duty rate

So, if you bought a property for £850,000 you would you pay no stamp duty on the first £125,000, then 2% on £125,000 to £250,000 and 5% above £250,000.

eg: £800,000 - £250,000 = £600,000 x 0.05 = £30,000 + £2,500 = £32,500

As the property price increases the rate of pay increases within a certain tax bracket with percentages rising when a higher price threshold is reached.

Buy-to-let and second homes Stamp Duty 2016

From April 2016, property buyers in England and Wales will have to pay an additional 3% on each stamp duty band. To discuss areas will provide the highest returns please speak to one of our property managers who can offer advice.

Buy-to-let and second home Stamp Duty tax bands
Brackets Standard rate Buy-to-let/second home rate (April 2016)
£0-£125,000 0% 3%
£125,001-£250 2% 5%
£250,001-£925k 5% 8%
£925,001-£1.5m 10% 13%
£1.5m+ 12% 15%

Source: HMRC

Can I reduce Stamp Duty?

As stamp duty is only payable on the land purchase, removable fixtures and fittings, or chattels, such as freestanding wardrobes, sofas, fridges, carpets and curtains, are not subject to SDLT and can, therefore, be subtracted from from the total property price. Everything 'attached' to property such as light switches technically form part of the property and are subject to SDLT.

If a seller is willing to leave certain chattels, you should agree to pay a reasonable amount between yourself and the vendor and subtract it from the agreed purchase price. This can be executed by a good tax lawyer or conveyancer.

Who pays Stamp Duty?

Stamp Duty is paid by everyone purchasing a property in England, Northern Ireland and Wales above £125,000, including overseas buyers OR Above £40,000 for Buy to Let or second homes.

Stamp Duty

What if I own a property abroad and buy a second property in the UK?

Property buyers who own and reside in a property abroad i.e. France, but intend to purchase a second property in the UK are eligible to pay the new SDLT rates. The definition of "main residence" will be based on fact (where you live) rather than subject to election, which differs from other taxes.

Are any types of properties exempt from this tax?

Yes. Caravans, houseboats, mobile homes and properties under £40,000 are exempt from the higher rate of SDLT. The consultation says, 'Transactions under £40,000 do not require a tax return to be filed with HMRC and are not subject to the higher rates.'

When is Stamp Duty paid?

You must pay stamp duty to the HMRC 30 days from the date of completion or you may risk a fine. Your solicitor or legal adviser should take care of this for you and ensure you don't miss the deadline. Some buyers prefer to add on the SDLT amount to their mortgage loan. Please speak to your mortgage provider.

How often does Stamp Duty change?

New stamp duty rates and thresholds have historically been introduced every 2-5 years with the latest changes effective of December 2014 and April 2016.

Full Explanation

For more information regarding the recent Stamp Duty changes read the government links and PDF.

Higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties




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