A Quick Guide to Stamp Duty

A Quick Guide to Stamp Duty

Note: Stamp Duty rates have changed since this article was published, particularly for first-time buyers. This article may contain outdated advice. The calculator tool has been updated to work with the new rates. Please visit our new stamp duty information page instead.

What is stamp duty?

Stamp duty is the shortened name for Stamp Duty Land Tax which you have to pay if you buy a property in the UK over a certain value. It is charged on all purchases of house, flats, land and other buildings but here we are going to concentrate on residential property sales. The stamp duty amount you pay is dependent on the value of the property and may also be due if you lease a property.

Before stamp duty was reformed in December 2014 it was not paid until the value of the property was over £125,001 after which it was calculated as a percentage of the total price of the property. So for example a house costing £125,000 would not need any stamp duty paid but a house costing £125,001 would attract a duty of £1,250.01. This HM Revenue and Customs slab structure was scrapped with the new tax being applied like income tax.

How much do I have to pay?

Stamp duty is worked out as a percentage of sale price as follows:

  • no charge on the first £125,000 of the property price

  • 2% on the next £125,000

  • 5% on the next £675,000

  • 10% on the next £575,000

  • 12% on the rest (above £1.5 million)

We've created this handy calculator for you to use, just insert the sale price to find out how much you will need to pay:

Note: Stamp Duty rates have changed since this article was published, particularly for first-time buyers. This article may contain outdated advice. The calculator tool has been updated to work with the new rates. Please visit our new stamp duty information page instead.

When do I have to pay and how?

You have 30 days from the date of completion to pay stamp duty, if you miss this deadline you may face a fine. Normally your solicitor will guide you through the process and ensure the deadline is not missed.

How is stamp duty different in Scotland?

The current UK wide stamp duty rules apply in Scotland but as of 1 April 2015 it will be replaced by Land and Buildings Transaction Tax. It is basically the same as the new UK system but with different thresholds:

  • no charge on the first £145,000 of the property price

  • 2% on the next £145,000 to £250,000

  • 5% on the next £250,000.01 to £325,000

  • 10% on the next £325,000.01 to £750,000

  • 12% on the rest (above £750,000)

Image © Phillip | Flickr

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