Stamp Duty Holiday

About stamp duty

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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.