Stamp Duty Explained & Stamp Duty Calculator
This page refers the standard rates and does not consider the Stamp Duty Holiday, introduced in July 2020. For information on the current holiday period please visit our recent blog post.
What Is Stamp Duty?
Stamp duty (formally known as Stamp Duty Land Tax or SDLT) is a charge that you must pay when you buy property or land that is worth more than £125,000. It applies to England, Wales, and Northern Ireland. Scotland pay Land and Buildings Transactions Tax, which is similar, but has different regulations. It came into effect in December 2003 and is taken as a percentage of the property transaction. This tax applies to both freehold and leasehold properties – whether you are buying outright or with a mortgage.
How Much is Stamp Duty?
There are several rate bands. The tax is calculated on the part of the property purchase price that falls within each band.
For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you owe is calculated as follows:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the final £25,000 = £1,250
Total SDLT = £3,750
First Time Buyers
First-time buyers will no longer pay Stamp Duty on properties worth up to £300,000.
If the property is worth between £300,000 and £500,000, you will pay no Stamp Duty on the first £300,000 but will pay the standard 5% on the remaining amount.
For example, if the property is worth £450,000, you will pay no Stamp Duty on the first £300,000 and 5% on the remaining £150,000.
Under the old system, first-time buyers would pay £12,500 in Stamp Duty on this £450,000 property. The new system means they will pay just £7,500.
Buyers of additional residential properties, such as second homes and buy-to-let properties, will have to pay an extra 3% on top of current rates for each band.
This increased rate applies to properties bought for £40,000 or more.
It does not apply to caravans, mobile homes, or houseboats.
If you buy a new main residence but there is a delay in selling your previous main residence, you will have to pay the higher Stamp Duty rates as you’ll now own two properties.
You can request a refund for the amount above the normal rates if:
- You sell your previous main residence within three years, and
- You claim the refund within three months of the sale of your previous main residence, or within 12 months of the filing date of your self-assessment tax return, whichever comes later.
For an application form and more information, visit the GOV.UK website.
To find out how much you will need to paycheck out our FREE calculator below…
(This Calculator takes into account any holiday allowances and changes to the tax)