What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is the tax you’ll pay when purchasing a property anywhere in the UK. The amount you pay depends on when you bought the property, how much you paid for it and whether you’re eligible for relief or an exemption.
SDLT is applied if you buy a freehold property, a new or existing leasehold or buy a property through a shared ownership scheme. It also applies if you are transferred property in exchange for payment. However, Stamp Duty can vary if you purchase a property in Scotland or Wales.
The Current Stamp Duty Rates
Since the 2022 announcement, Stamp Duty is now applied on properties worth £250,000 or above.
Rates For a Single Property
If you buy a property and it's the only one you own, you’ll be required to pay stamp duty rates.
For example, if you buy a house for £295,000, the SDLT will be calculated as follows:
0% on the first £250,000
5% on the final £450,000
Total SDLT: £2,250
Stamp Duty Rates For Additional Properties
For the purchase of additional properties - such as second homes or buy-to-let - a 3% SDLT is applied on the following top rates:
Up to £250,000: Zero
£250,001 to £920,000: 5%
£920,001 to £1.5 million: 10%
£1.5 million plus: 12%
Stamp Duty Rates For First-Time Buyers
First-time buyers can claim a discount (relief) if the property is their first home. This means paying:
No SDLT up to £425,000
5% SDLT on the portion from £425,001 to £625,000
Anything above £625,000 does not receive first-time buyer relief but rather the rules for people who’ve bought a home before will apply instead.
If you are a first-time buyer and purchase a property for £500,000 the SDLT you owe will be calculated as follows;
0% on the first £425,000 = £0
5% on the remaining £75,000 = £3,750
Total SDLT = £3,750
New Leasehold Sales and Transfers
The above rates of SDLT also apply when purchasing a new residential leasehold property and the purchase price of the lease, or ‘lease premium’.
If the total rent over the life of the lease (otherwise known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you’ll pay SDLT at 1% on the portion above £250,000. However, this does not apply to existing (‘assigned’) leases.
If it Takes Longer Than 36 Months to Sell Your Previous Main Home
You may still be entitled to a refund of the extra 3% SDLT if the following factors apply:
Stamp Duty Rates For Non-UK Residents
If you’re not in the UK for at least six months during the twelve months before your purchase you’re not a UK resident for the purposes of SDLT.
Non-UK residents who purchase property in England or Northern Ireland will pay 2 percentage points more overall. This applies to both leasehold and freehold properties and is in addition to the 3% surcharge already applied to additional properties and buy-to-let purchases.