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What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax applied by the Government to all property and land transactions in England and Northern Ireland over a certain price. The name originates from the fact that you used to get a physical stamp or seal applied to your sale documents to recognise that payment had been made. These transactions now happen electronically.
In Scotland and Wales, there’s still a tax to pay on property and land purchases. But it's known as Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales.
New Stamp Duty Rates
In England and Northern Ireland
If you purchase a residential property between 1 July 2021 to 30 September 2021, you will pay zero Stamp Duty on the amount that you pay for the property if it is below £250,000. You will pay a reduced amount of Stamp Duty if the property is above £250,000. See below:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
From 1 October 2021, no stamp duty will be paid up to £125,000.
These new rates apply regardless of whether you’re buying your first home or have owned a residential property before. If you’re buying additional properties over £40,000 an extra 3% in SDLT is still required to be paid on top of the new revised rates, see below:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | 3% |
| The next £675,000 (the portion from £250,001 to £925,000) | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
| The remaining amount (the portion above £1.5 million) | 15% |
Land and Buildings Tax in Scotland
This applies to all relevant transactions from 1 April 2021:
| Purchase price | LBTT rate |
|---|---|
| Up to £145,000 | 0% |
| £145,001 to £250,000 | 2% |
| £250,001 to £325,000 | 5% |
| £325,001 to £750,000 | 10% |
| Over £750,000 | 12% |
New Land Transaction Tax in Wales
New rates for transactions with an effective date on or after 1 July 2021:
| Price threshold | LTT rate |
|---|---|
| The portion up to and including £180,000 | 0% |
| The portion over £180,000 up to and including £250,000 | 3.5% |
| The portion over £250,000 up to and including £400,000 | 5% |
| The portion over £400,000 up to and including £750,000 | 7.5% |
| The portion over £750,000 up to and including £1,500,000 | 10% |
| The portion over £1,500,000 | 12% |
What does it cost?
Stamp Duty Thresholds
How much SDLT you have to pay is dependent on whether the property or land is residential, first time buyer, your main resident, an additional property or non-residential. Essentially, tax is charged as a percentage on portions of the overall property or land price but the bands are slightly different.
Current Stamp Duty rates:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Previous Stamp Duty Rates
Stamp Duty Land Tax (applicable in England and Northen Ireland)
| Portion of purchase price | Rate payable on portion price |
|---|---|
| The portion up to and including £125,000 | 0% |
| £125,000.01 up to and including £250,000 | 2% |
| £250,000.01 up to and including £925,000 | 5% |
| £925,000.01 up to and including £1,500,000 | 10% |
| £1,500,000.01 + | 12% |
How to calculate Stamp Duty
Learn how to calculate Stamp Duty tax in England, NI, Scotland and Wales under the current rates and previous rates.
Calculating Stamp Duty in England and NI
If you are buying a house in England or Northern Ireland, you can use HM Revenue and Customs’ Stamp Duty Land Tax calculator to work out how much you need to pay.
Calculating Stamp Duty in Scotland
If you are buying a house in Scotland, you can work out the Land and Buildings Transactions Tax (LBTT) payable by using Revenue Scotland’s LBTT calculator on their website.
Calculating Stamp Duty in Wales
If you are buying a house in Wales and want to work out the Land Transaction Tax payable, there’s a helpful Land Transaction Tax calculator on gov.wales for you to use.
What if I’m a first-time buyer?
Stamp Duty Relief for First Time buyers
If you’re buying a property for the first time in England, Northern Ireland and Scotland – you could be eligible for a relief. This relief would mean that you pay a reduced amount of Stamp Duty or Land Building Tax.
In England and NI
The UK government have implemented special rules for first time buyers. If you bought your first home before 8th July 2020 or from 1st July 2021, you can claim discount relief.
If you purchase a residential property in this time range, you only start to pay SDLT on the amount that you pay for the property above £300,000. These rates apply whether you are buying your first home or have owned property before.
Gov.uk has full details on the temporary reduced rates for Stamp Duty Land Tax.
From 1 April 2021, these rates reverted back to the rules implemented from 22 November 2017, where first time buyers could benefit from a Stamp Duty Land Tax relief for buyers buying a property for under £500,000. This means that you don’t pay any stamp duty on the first £300,000. If it’s more than £300,000, then you pay 5% on the portion from £300,000.01 to £500,000.
So, for example, if you’re buying a property for £400,000, you don’t pay any stamp duty on the first £300,000, but you will have to pay 5% of the £300,000.01 to £400,000 portion, which would be £5,000.
There are a number of conditions you’ll need to meet to qualify for the discount. Here are the main ones, but you should visit gov.uk for more details:
- The property must be £500,000 or under.
- You and anyone else you’re buying with must be first-time buyers.
- The property you’re buying must be your only or main residence.
In Scotland
From 1 April 2021, a relief for first-time buyers is available. The starting threshold for LBTT relief is £175,000.
In Wales
At the moment, there are no plans to introduce a special LTT relief for first-time buyers in Wales, but the idea is that most first-time buyers will benefit from the LTT structure.
Claiming the Relief
To claim your first-time buyers SDLT relief simply enter relief code ‘32’ in the Stamp Duty return. For returns completed online, the tax due (with the relief applied) will be automatically calculated.
Find out more about first time buyers Stamp Duty Land Tax relief from the UK Government website.
What if I’m buying a second property?
For additional property purchases in England and Northern Ireland an Additional Dwelling Supplement (ADS) applies. A 3% higher rate applies on top of the standard rates for property over £40,000. The below shows the current rates for the period 8 July 2020 to 31 March 2021.
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £500,000 | 3% |
| The next £425,000 (the portion from £500,001 to £925,000) | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
| The remaining amount (the portion above £1.5 million) | 15% |
Buying Additional properties In Scotland follows a similar approach for the period of 15 July 2020 to 31 March 2021. This means that property this is liable to the ADS will not pay standard rate of LBTT on the first £250,000 of buying price. ADS will remain payable at 4% of the total purchase price over £40,000.
When purchasing an additional property in Wales you will also be required to pay higher residential rates of Land Transaction Tax, see below:
| Price threshold | LTT rate |
|---|---|
| The portion up to and including £180,000 | 3% |
| The portion over £180,000 up to and including £250,000 | 6.5% |
| The portion over £250,000 up to and including £400,000 | 8% |
| The portion over £400,000 up to and including £750,000 | 10.5% |
| The portion over £750,000 up to and including £1,500,000 | 13% |
| The portion over £1,500,000 | 15% |
Stamp Duty Calculator for Second Home
Calculate how much Stamp Duty can expect to pay for your second home or additional property purchases.
How and when to pay
Wherever you are in the country, SDLT payments are due within 14 days of the transaction date. The transaction date can be the defined as:
- The transaction completion date.
- The date of first payment due.
- The date at which at least 90% of the payment is due.
- The date at which the buyer is entitled to take possession of the property.
It is vital that you pay HMRC, Revenue Scotland or Welsh Revenue Authority by the deadline or a penalty, interest or both will be required. It’s likely that your solicitor or conveyancing firm will transfer your funds to HMRC, Revenue Scotland or the Welsh Revenue Authority, but it’s your responsibility to ensure the payment is made. Remember that some payment methods may take longer to clear than others, so bear in mind your deadline. It’s also worth noting that you may be required to file details of your transaction even if the cost is in the 0% band.
Ways to pay include: Online payments, Bacs, CHAPS, Online debit card, Bank or building society or Cheque.
How to pay Stamp Duty Land Tax – GOV.UK
How to pay Land and Buildings Transaction Tax – Revenue Scotland
How to pay Land Transaction Tax – gov.wales
Adding the cost of the tax to your mortgage
It is possible to add the cost of SDLT, LBTT or LTT to your mortgage. But there are a few things you consider before doing this.
Firstly, you’ll end up paying interest on the tax. With most mortgages running for 25 years, you could end up paying your lender back considerably more than originally levied.
Secondly, you need to think about what impact adding the cost could have on your loan-to-value (LTV). Adding extra costs to your mortgage value can move your LTV by a few per cent, which could in turn have an impact on the deals that lenders can offer you.
Are there any exceptions to paying SDLT, LBTT or LTT?
The majority of residential freehold or leasehold property purchases will be subject to SDLT, LBTT or LTT respectively.
There are a few reliefs and exemptions on Stamp Duty, Land and Buildings Transaction Tax and Land Transaction Tax but they are only for very specific situations.
As always, if you need help on your own circumstances, you should seek independent financial advice.
If you would like to talk about a TSB mortgage, you can make an appointment with one of our mortgage advisors. Remember that your home could be at risk if you don't keep up repayments on a mortgage or other loan secured against it.
This information is for guidance only and is correct as of 1 September 2021.
