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Stamp Duty – everything you need to know

If you’re buying a home in England or Northern Ireland you might now pay a reduced rate of Stamp Duty Land Tax (SDLT) until 30 September 2021. You will pay no Stamp Duty if the amount you pay for your main home is under £250,000. If you’re purchasing additional properties you will still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band.

What is Stamp Duty?

Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England or Northern Ireland over a certain price.

If you’re buying your main property up until 30 September 2021, you will not have to pay Stamp Duty on properties costing up to £250,000.

For properties costing more than £250,000 you will pay the Stamp Duty rate based on the purchase price.

If you’re a first-time buyer, you will pay no Stamp Duty on properties costing up to £300,000, and a discounted rate on property purchases up to £500,000.

From 1 October 2021, you will pay Stamp Duty on residential properties costing more than £125,000, unless you qualify for first-time buyers relief.

If you’re buying a second home, you’ll still pay an extra 3% Stamp Duty on properties costing more than £40,000 at the relevant rates at that time.

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.

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How much is Stamp Duty?

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There are several rate bands for Stamp Duty.

The tax is calculated on the part of the property purchase price falling within each band.

Until 30 September 2021, you’ll pay no Stamp Duty on the purchase of your main property costing up to £250,000. If the property you’re buying costs more than £250,000, you’ll pay Stamp Duty based on the revised rate bands, below.

Example

For example, if you buy a house for £500,000, the Stamp Duty Land Tax you owe is calculated as follows:

  • 0% on the first £250,000 = £0
  • 5% on the final £250,000 = £12,500

Total SDLT = £12,500

Stamp Duty rates

Minimum property purchase price
Maximum property purchase price
Stamp Duty rate

£0

£250,000

0%

£250,001

£925,000

5%

£925,001

£1.5 million

10%

Over £1.5 million

    

12%

Stamp Duty from 1 October 2021

From 1 October 2021, you’ll pay no Stamp Duty on properties costing up to £125,000, unless you’re a first-time buyer.

Minimum property purchase price
Maximum property purchase price
Stamp Duty rate

£0

£125,000

0%

£125,001

£250,000

2%

£250,001

£925,000

5%

£925,001

£1.5 million

10%

Over £1.5 million

12%

Stamp Duty on second homes

If you’re buying an additional property, such as a second home you’ll have to pay an extra 3% in Stamp Duty on top of the revised rates for each band up until 30 September 2021.

This increased rate applies to properties bought for £40,000 or more.

It doesn’t apply to caravans, mobile homes or houseboats.

Minimum property purchase price
Maximum property purchase price
Stamp Duty rate (only applies only to the part of the property price falling within each band)

£0

£250,000

3%

£250,001

£925,000

8%

£925,001

£1.5 million

13%

Over £1.5 million

    

15%

You must have completed your property purchase by 30 September 2021 to qualify for the revised rates on Stamp Duty.

Stamp Duty relief for first-time buyers

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From 1 July 2021, if you’re a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties worth up to £300,000.

For properties costing up to £500,000, you will pay no Stamp Duty on the first £300,000. You’ll then pay Stamp Duty at the relevant rate of 5% on the remaining amount, up to £200,000.

If the property you’re buying is worth over £500,000, you will need to pay the standard rates of Stamp Duty and won’t qualify for first-time buyer’s relief.

Stamp Duty for non-residents

From 1 April 2021, if you’re a non-UK resident buying a residential property in England or Northern Ireland, you might have to pay an additional 2% on top of the existing Stamp Duty rates for properties costing more than £40,000.

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Repayment of higher rates of Stamp Duty

If you buy a new main residence but there’s a delay in selling your previous main residence, you might have to pay the higher rates of Stamp Duty as you’ll now own two properties.

However if you sell your previous main home within three years of buying your new home you might be able to apply for a refund of the higher SDLT rates you paid when you purchased your new home.

You can request a refund for the amount above the normal Stamp Duty 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 SDLT tax return, whichever comes later.
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When do you have to pay Stamp Duty?

You have 14 days to file a Stamp Duty Land Tax (SDLT) return and pay any SDLT due.

If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.

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How to pay Stamp Duty

Usually your solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself.

Either way, you’re responsible for making sure it’s all submitted on time.

You must still submit a return (unless exempt) even if you won’t need to pay any Stamp Duty.

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When is Stamp Duty not payable?

There may be circumstances where Stamp Duty may not be payable. Some examples might include:

  • Transfer of property in pursuance of a court order during separation, divorce or dissolution are generally exempt. If a couple agree to separate permanently without getting a court order they will be treated for SDLT purposes as an unmarried couple.
  • Property left under the terms of a will may not be subject to SDLT provided no other consideration is given. There is usually no requirement to inform HRMC in this case.
  • If you gift your home to someone else they won’t have to pay  SDLT on the market value of the property provided there is no outstanding mortgage on the property. If you take over some or all of an existing mortgage, SDLT may be payable on the value of the mortgage over the relevant SDLT threshold.
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Whatever your circumstances or plans, move forward with MoneyHelper.

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MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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