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What is Stamp Duty?
Stamp Duty (often called Stamp Duty Land Tax or SDLT) is an English tax that is paid when you buy a property. In Scotland and Wales, they have similar taxes with different names and slightly different calculations.
In England, it is calculated based on the purchase price of the property. In general, you will only have to pay tax on the property itself (i.e. the land and the buildings) plus anything permanently attached to it such as the heating system or kitchen and bathrooms.
If the price you pay includes extras that are not permanently attached to the property such as carpets or furniture then the value of these items is excluded from the calculation.
For example, if you buy a home for £400,000 but the price includes £20,000 for furniture and carpets, the Stamp Duty calculation will be based on the net figure of £380,000.
Stamp Duty applies to both freehold and leasehold properties and whether you are buying outright or with the help of a mortgage.
Do first-time buyers have to pay Stamp Duty?
Yes, first-time buyers do have to pay Stamp Duty, however the rate is lower in order to encourage people to get a foot on the property ladder.
When is Stamp Duty payable?
A buyer has 14 days from the completion date to file a Stamp Duty return and pay any tax due. If you have a solicitor, agent or conveyancer, they will usually file your return and pay the tax on your behalf on the day of completion and therefore the tax is included with their fees. They will also claim any relief you may be eligible for, if you are a first time buyer, for example.
HMRC are able to charge penalties and interest if you fail to submit a tax return or pay the tax within 14 days of completion.
Stamp Duty on a second home
If you are purchasing a second home, you will need to pay an additional 3% on top of the normal Stamp Duty rates. HMRC calls this charge the “Higher Rates on Additional Dwellings” or “HRAD”.
The 3% surcharge applies to anyone who already owns one or more properties and is based on the entire purchase price of the property being bought. The higher rates apply to anyone purchasing a property who already owns one or more properties.
If an individual already owns a property and has not replaced their main residence at the end of the day of the transaction, the higher rates will apply. In the event of a delay in the sale of your previous main residence that causes you to own more than one property temporarily, the higher rate will still apply but you can request a refund within 36 months of the transaction.
How much is Stamp Duty?
The amount of Stamp Duty you pay will depend on the price of the property, whether you are a first-time buyer or whether you already own a property. The property price is split into bands and the tax is then calculated as follows:
| Standard Rate | First time buyer rate | Additional property rate | |
|---|---|---|---|
| 0 - £125,000 | 0% | 0% | 3% |
| £125,001 - £250,000 | 2% | 0% | 5% |
| £250,001 - £300,000 | 5% | 0% | 8% |
| £300,001 - £500,000 | 5% | 5% | 8% |
| £500,001 - £925,000 | 5% | 5% | 8% |
| £925,001 - £1,500,000 | 10% | 10% | 13% |
| Over £1,500,000 | 12% | 12% | 15% |
If, for example, you are a first-time buyer who is buying a property for £600,000 you would pay Stamp Duty of £15,000:
| First time buyer rate | Amount | Stamp duty | |
|---|---|---|---|
| 0 - £125,000 | 0% | 125,000 | 0 |
| £125,001 - £250,000 | 0 | 125,000 | 0 |
| £250,001 - £300,000 | 0% | 50,000 | 0 |
| £300,001 - £500,000 | 5% | 200,000 | 10,000 |
| £500,001 - £600,000 | 5% | 100,000 | 5,000 |
| TOTAL | £600,000 | £15,000 |
If you have sold your existing home and bought a new property for £450,000 (and you do not own any other properties) you would pay Stamp Duty of £12,500.
| Standard rate | Amount | Stamp duty | |
|---|---|---|---|
| 0 - £125,000 | 0% | 125,000 | 0 |
| £125,001 - £250,000 | 2% | 125,000 | 2,500 |
| £250,001 - £300,000 | 5% | 50,000 | 2,500 |
| £300,001 - £500,000 | 5% | 150,000 | 7,500 |
| TOTAL | £450,000 | £12,500 |
Temporary Stamp Duty Holiday
New Government Stamp Duty Scheme - Stamp Duty Holiday
To try to give the housing market a boost as the UK economy starts to recover following the COVID-19 pandemic, the government has announced that, for a limited period, the level at which Stamp Duty is charged is being temporarily raised to £500,000 for first-time buyers. If you already own another property the Stamp Duty payable on the first £500,000 of the purchase price is reduced to the 3% HRAD surcharge only.
This “Stamp Duty Holiday” only applies to residential properties purchased between 8 July 2020 and 31 March 2021.
If you own multiple properties, you will still have to pay the 3% HRAD.
What are the rates of the Stamp Duty Holiday scheme?
The temporary rate table is as follows:
| Standard Rate | First time buyer rate | Additional property rate | |
|---|---|---|---|
| 0 - £125,000 | 0% | 0% | 3% |
| £125,001 - £250,000 | 0% | 0% | 3% |
| £250,001 - £300,000 | 0% | 0% | 3% |
| £300,001 - £500,000 | 0% | 0% | 3% |
| £500,001 - £925,000 | 5% | 5% | 8% |
| £925,001 - £1,500,000 | 10% | 10% | 13% |
| Over £1,500,000 | 12% | 12% | 15% |
Using the same examples, a first-time buyer who is buying a property for £600,000 would pay £5,000 in Stamp Duty:
| First time buyer rate | Amount | Stamp duty | |
|---|---|---|---|
| 0 - £125,000 | 0% | 125,000 | 0 |
| £125,001 - £250,000 | 0 | 125,000 | 0 |
| £250,001 - £300,000 | 0% | 50,000 | 0 |
| £300,001 - £500,000 | 0% | 200,000 | 0 |
| £500,001 - £925,000 | 5% | 100,000 | 5,000 |
| TOTAL | £600,000 | £5,000 |
Someone moving into a new property that cost £450,000 (without owning another property) would pay no Stamp Duty at all:
| Standard Rate | Amount | Stamp duty | |
|---|---|---|---|
| 0 - £125,000 | 0% | 125,000 | 0 |
| £125,001 - £250,000 | 0% | 125,000 | 0 |
| £250,001 - £300,000 | 0% | 50,000 | 0 |
| £300,001 - £500,000 | 0% | 150,000 | 0 |
| TOTAL | £450,000 | 0 |
How much could you save?
A first-time buyer could save up to £10,000 with the new scheme. Someone that currently own a property but is considering moving or buying an additional property could save up to £15,000.
Examples of the savings that could be made for different purchase prices are shown in the table below.
To find out more about Stamp Duty, visit Gov.uk or get in touch with a member of our team at 0203 3558178.
| Current reduced rate | Previous full rate | Saving | |
|---|---|---|---|
| £250,000 | 0 | 2,500 | £2,500 |
| £300,000 | 0 | 5,000 | £5,000 |
| £350,000 | 0 | 7,500 | £7,500 |
| £400,000 | 0 | 10,000 | £10,000 |
| £450,000 | 0 | 12,500 | £12,500 |
| £500,000 | 0 | 15,000 | £15,000 |
| £550,000 | 2,500 | 17,500 | £15,000 |
| £600,000 | 5,000 | 20,000 | £15,000 |
| £650,000 | 7,500 | 22,500 | £15,000 |
| £700,000 | 10,000 | 22,500 | £15,000 |
| £750,000 | 12,500 | 27,500 | £15,000 |
| £800,000 | 15,000 | 30,000 | £15,000 |
| £850,000 | 17,500 | 32,500 | £15,000 |
| £900,000 | 20,000 | 35,000 | £15,000 |
| £950,000 | 23,750 | 38,750 | £15,000 |
| £1,000,000 | 28,750 | 43,750 | £15,000 |
| Current reduced rate | Previous full rate | Saving | |
|---|---|---|---|
| £250,000 | 0 | 0 | 0 |
| £300,000 | 0 | 0,000 | 0 |
| £350,000 | 0 | 2,500 | £2,500 |
| £400,000 | 0 | 5,000 | £5,000 |
| £450,000 | 0 | 7,500 | £7,500 |
| £500,000 | 0 | 10,000 | £10,000 |
| £550,000 | 2,500 | 12,500 | £10,000 |
| £600,000 | 5,000 | 15,000 | £10,000 |
| £650,000 | 7,500 | 17,500 | £10,000 |
| £700,000 | 10,000 | 20,000 | £10,000 |
| £750,000 | 12,500 | 22,500 | £10,000 |
| £800,000 | 15,000 | 25,000 | £10,000 |
| £850,000 | 17,500 | 30,000 | £10,000 |
| £900,000 | 20,000 | 30,000 | £15,000 |
| £950,000 | 23,750 | 33,750 | £10,000 |
| £1,000,000 | 28,750 | 38,750 | £10,000 |
| Current reduced rate | Previous full rate | Saving | |
|---|---|---|---|
| £250,000 | 7,500 | 10,000 | £2,500 |
| £300,000 | 9,000 | 14,000 | £5,000 |
| £350,000 | 10,500 | 18,000 | £7,500 |
| £400,000 | 12,000 | 22,000 | £10,000 |
| £450,000 | 13,500 | 26,000 | £12,500 |
| £500,000 | 15,000 | 30,000 | £15,000 |
| £550,000 | 19,000 | 34,500 | £15,000 |
| £600,000 | 23,000 | 38,000 | £15,000 |
| £650,000 | 27,000 | 42,000 | £15,000 |
| £700,000 | 31,000 | 46,000 | £15,000 |
| £750,000 | 35,000 | 50,000 | £15,000 |
| £800,000 | 39,000 | 54,000 | £15,000 |
| £850,000 | 43,000 | 58,000 | £15,000 |
| £900,000 | 47,000 | 62,000 | £15,000 |
| £950,000 | 52,250 | 67,250 | £15,000 |
| £1,000,000 | 58,750 | 73,750 | £10,000 |
This website provides general information about Stamp Duty Land Tax (‘SDLT’) in property transactions, however it does not constitute personal or legal advice. Galliard Group Limited, its subsidiaries and affiliates, make no warranty as to the content and/or accuracy of such information and disclaim all liability and responsibility in respect thereof. Prior to considering entering into any property transaction, Galliard Group Limited, its subsidiaries and affiliates recommend that you seek independent legal advice. All rights reserved.