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 June 2021. You will pay no Stamp Duty if the amount you pay for your main home is under £500,000. 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 June 2021, you will not have to pay Stamp Duty on properties costing up to £500,000. This will apply whether you’re a first-time buyer or have previously owned a property.

For properties costing more than £500,000 will pay the Stamp Duty rate based on the value of the property over £500,000.

From 1 July to 30 September 2021, you won't have to pay Stamp Duty on residential properties costing up to £250,000. If you’re a first-time buyer, you will pay no Stamp Duty on properties costing up to £300,000, and a discounted rate, up to £500,000.

From 1 October, you will pay Stamp Duty on properties costing more than £125,000 for residential properties, unless you’re a first-time buyer.

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 rate 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.

How much is Stamp Duty?

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 June 2021, you’ll pay no Stamp Duty on the purchase of your main property costing up to £500,000. If the property you’re buying costs more than £500,000, you’ll pay Stamp Duty based on the revised rate bands, below.

Example

For example, if you buy a house for £575,000, the Stamp Duty Land Tax you owe is calculated as follows:

  • 0% on the first £500,000 = £0
  • 5% on the final £75,000 = £3,750

Total SDLT = £3,750

This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8 July 2020.

Stamp Duty rates*

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

£0

£500,000

0%

£500,001

£925,000

5%

£925,001

£1.5 million

10%

Over £1.5 million

    

12%

*Stamp duty for residential new leasehold sales and transfers are charged differently.

Stamp Duty from 1 July 2021

From 1 July to 30 September 2021, you’ll pay no Stamp Duty on residential properties costing up to £250,000.

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

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

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

£125,00

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 June 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

£500,000

3%

£500,001

£925,000

8%

£925,001

£1.5 million

13%

Over £1.5 million

    

15%

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

From 1 July to 30 September 2021 and from 1 October 2021, you will pay an extra 3% on top of the Stamp Duty rates during this time, as shown above.

Stamp Duty relief for first-time buyers

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 will have to pay an additional 2% on top of the existing Stamp Duty rates for properties costing more than £40,000.

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’ll have to pay the higher Stamp Duty rates as you’ll now own two properties.

But if you sell or give away your previous main home within three years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.

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.

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.

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.

When is Stamp Duty not payable?

There are other circumstances in which Stamp Duty is either not payable or can be reduced.

  • If the property is slightly over rate band. If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.
  • Transfer of property during separation, divorce or dissolution. If you’re divorcing or separating from your spouse or partner, there’s no Stamp Duty to pay if you transfer a proportion of your home’s value to them.
  • Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your will – they won’t have to pay Stamp Duty on the market value of the property.

But if you exchange properties with another person, you will each have to pay Stamp Duty on the property you receive based on its market value.

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