Stamp Duty Land Tax– Everything you need to know

What is stamp duty?

Stamp duty land tax (or land and buildings transaction tax in Scotland) is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate you’ll pay the tax at varies based on the price of the property and the type (we’ll focus on residential purchases, rather than commercial as they are slightly different).

How much will you pay?

Under the current system – which applies to England & Northern Ireland – Stamp Duty only applies to properties that are over £250,000, anything over this figure you will pay tax on. The below figures show how much you will pay if you are buying a residential property as a none first-time buyer and it will be the only one you own on completion of the purchase:

Up to £250,000 purchase Price: 0% stamp duty
Value between £250,001 and £925,000: You will pay 5%
Value between £925,001 and £1.5 million: You will pay 10%

It’s quite complex, so here’s an example:

You are buying a residential property for £300,000, your SDLT will be calculated as follows:

0% on the first £250,000 which is £0

5% of the final £50,000 which is £2,500 (Difference between £250,000 & £300,000 = £50,000 x 5%)

The total Stamp Duty Land Tax you will pay is £2,500

How much stamp duty does a First-Time buyer pay?

If you are a first-time buyer, the system is different if you are buying a property in England or Northern Ireland worth up to £425,000. You’ll pay zero stamp duty on the first £425,000 and then 5% tax on anything over that up to £625,000, This means the stamp duty rates for first-time buyers are as follows:

Up to £425,000 purchase price: 0% stamp duty

£425,001 to £625,000: 5% (on that portion of the purchase price only)

Any property above £625,000: you will not be eligible to follow this criteria and you will have to follow the rules for non first-time buyers above.

Using the above, for a first-time buyer purchasing a property worth £500,000, the calculations will be slightly different:

You will pay nothing below £425,000, which is £0.
You will pay 5% on the value of the property between £425.001 to £500,000, which is £3,750 (Difference between £500,000 & £425,000 =£75,000 x 5%)

So in total you will pay £3,750

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