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Stamp Duty Land Tax (or SDLT) is a tax you pay when purchasing a property or piece of land in England or Northern Ireland (in Wales, there is a similar tax known as the ‘Land Transaction Tax’). The name dates back to the 1600s, where legal documents were embossed with large physical ‘stamps’ – though nowadays it is all dealt with electronically.

The amount of SDLT you pay is calculated based on the full purchase price of the property, and is charged on any transaction regardless of if you are buying with a mortgage or not. The tax payable is worked out upon completion, so will be based on the final amount you pay for the property, subject to any further negotiations you might make following your initial offer.

There are three different rates at which the tax is calculated, which are broken down below. The rate that applies in your case will depend upon your circumstances and our New Business Team are here to help if you are unsure.

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Stamp Duty Rates Breakdown

Standard Rate

Most property transactions are subject to the standard rate of Stamp Duty Land Tax. This is the rate payable when you are selling your current home and buying another. This rate also applies if you do not currently own a property, but have done so in the past.

The amount of tax is payable based upon the purchase price of the property, and is charged as a percentage of the overall total across several different bands. The rates payable are as follows:

Property Price

Stamp Duty Rate

Up to £125,000

Zero

Portion from £125,001 to £250,000

2%

Portion from £250,001 to £925,000

5%

Portion from £925,001 to £1.5 Million

10 %

Remaining amount about £1.5 Million

12%

 

To use a purchase price of £300,000 as an example, you would pay no tax at all on the first £125,000 of the purchase price, 2% of the portion up to £250,000, and then 5% on the final remaining amount up to £300,000. This would come to an overall SDLT amount of £5,000.

 

Higher Rate

The Higher Rate of SDLT is charged on ‘second homes’. The most common example would be a Buy to Let/Investment property, but there are several other situations in which a property may be classed as ‘second home’. If anyone involved in the purchase is named on the deeds to another property, anywhere else in the world, then the higher rate of SDLT would apply.

The rules do make a concession, however, for those who own additional properties but wish to move house. If you own a buy to let for example, but plan on selling your current home and purchasing a new one, then the Standard Rate of SDLT applies. The properties being bought and sold must both be intended as your ‘main residence’, where you personally live and spend the majority of your time, however, in order to qualify.

The amount of tax is payable based on the purchase price of the property, and is charged as a percentage of the overall total across several different bands. The rates payable are as follows:

Property Price

Stamp Duty Rate

Up to £125,000

3%

Portion from £125,001 to £250,000

5%

Portion from £250,001 to £925,000

8%

Portion from £925,001 to £1.5 Million

13 %

Remaining amount about £1.5 Million

15%

To use a purchase price of £300,000 as an example, you would pay 3% on the first £125,000 of the purchase price, 5% of the portion up to £250,000, and then 8% on the final remaining amount up to £400,000. This would come to an overall SDLT amount of £14,000.

 

First Time Buyers

First Time Buyers benefit from a reduced rate of SDLT when purchasing their first property. To qualify for the lower rate, everyone involved in the purchase needs to be a first-time buyer – if any of you have owned a property before, then the standard rates of SDLT would apply.

Under the first-time buyer rate, you do not pay any tax at all on properties purchased up to £300,000, and then pay a reduced rate up to £500,000. If you purchase a property for more than £500,000 then you do not receive any first-time buyer relief and the Standard Rate of SDLT applies.

Property Price

Stamp Duty Rate

Up to £300,000

Zero

Portion from £300,001 to £500,000

5%

 

If you have any queries about how the SDLT rates might apply in your case, please contact a member of our New Business Team who would be more than happy to help.  

Find out how much stamp duty you will pay with our handy stamp duty calculator.

If you would like to talk to one of our property team about your property purchase please call 0330 017 6309

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