By: Jack Williams

If you are purchasing a property in the UK, you will most likely need to pay Stamp Duty Land Tax (Stamp Duty) to the Government. How much you owe is dependent on the purchase price of the property and your circumstances. 

Stamp Duty is a tax you are required to pay when you purchase a property in the UK that is above a certain value. The tax is calculated as a percentage of the purchase price of the property, and the rate varies depending on the value of the property and the type of transaction. Stamp Duty applies whether you are purchasing the property with cash or borrowing from a mortgage lender. The tax applies to freehold purchases, leasehold purchases and shared ownership schemes. 
 

How much do I need to pay?

For residential property purchases, the Stamp Duty rate is as follows:

0% on the first £125,000 of the purchase price

2% on the next £125,000

5% on the next £675,000

10% on the next £575,000

12% on the remainder of the purchase price
 

The Stamp Duty rate for non-residential property purchases is generally higher than for residential property, and there is also a separate Stamp Duty rate for additional properties, such as a second home or buy-to-let property. It's important to know that Stamp Duty is due within 14 days of the completion of the property purchase. If the tax is not paid on time, there may be penalties and interest charges applied.
 

First time buyers: Stamp Duty relief

For first-time home buyers, there is a temporary reduction in the Stamp Duty rate, with the initial threshold raised to £300,000 and the 5% rate not kicking in until £500,000. Meaning, a first time buyer will pay no Stamp Duty on a property up to £300,000. If purchasing a property up to £500,000, first time buyers will pay 0% on the first £300,000 and 5% on the remaining amount. This change was made to help first-time buyers to afford the high cost of buying a house in the UK.

You cannot claim Stamp Duty first time buyer relief if:

•    You have previously inherited a property

•    You own property abroad

•    You plan on purchasing the property to rent it out 

Other exemptions from Stamp Duty tax

In addition to first time buyers, there are some circumstances that exempt you from paying stamp duty land tax:

•    You inherit property in a will

•    Property is transferred to you following a divorce or separation 

•    The property is mobile such as a caravan or houseboat 

•    No payment changes hands for a land or property transfer

You can find out more about these and other examples in HMRC’s guidance on exemptions.

 

Stamp Duty Calculator

To calculate the amount of stamp duty you need to pay, you can use our online calculator. Our Stamp Duty calculator takes into account the purchase price of the property, as well as any applicable exemptions or reductions in the stamp duty rate.

For example, if you're buying a residential property for £500,000, and it is your first home, you'll pay:

0% on the first £300,000 = £0

5% on the next £200,000 = £10,000

So, you'll need to pay a total of £10,000 in Stamp Duty.

If you need any advice on Stamp Duty, give us a call and one of our advisers can assist you.