What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax imposed on the purchase of a property in England and Northern Ireland. It is a form of tax placed on documents, publications and other legal instruments that was once certified by a physical stamp being attached onto the document to represent payment – hence the name!

You most often pay SDLT where a property price is above £125,00.00, when buying a residential property (for example a house or flat), or where the purchase price is more than £40,000.00 for second homes.

The tax applies to both freehold and leasehold properties.

Why do I have to pay it?

First introduced in 1694, the original intention was for stamp duty land tax to be a temporary measure to raise finances for the war against France. However, having proved to be a successful means of raising revenue for the government, it continues today and now in most parts of the UK, you are required to pay stamp duty when you buy a property above a certain market value.

How much does stamp duty land tax cost?

Dependent on the purchase price of a property, the tax is charged at different rates as shown in the table below.

PURCHASE PRICE RATE OF STAMP DUTY ADDITIONAL PROPERTY RATE
£0 to £125,000 0% 3%
£125,001 to £250,000 2% 5%
£250,001 to £925,000 5% 8%
£925,001 to £1,500,000 10% 13%
£1,500,001 and over £12% £15%

Do first time buyers pay Stamp Duty Land Tax?

You can claim relief from paying SDLT if you, and anyone else you’re buying with, are first-time buyers. First time buyer stamp duty relief only applies in England and Northern Ireland on properties worth up to £500,000.00. Where the purchase price exceeds £500,000.00, first time buyers must follow the same rules as those who’ve bought a property previously.

Will I pay Stamp Duty Land Tax on a second home?

When buying a new residential property that results in you owning more than one property (e.g. buy to let/second home), you will pay 3% on top of the usual SDLT rates where the purchase price is more than £40,000.00. However, this does not apply if the property you are purchasing is to replace your main residence which has already been/is to be sold prior to the completion of your purchase.

If your main residence has not been sold on the day of or prior to the completion of your purchase, you will pay the higher stamp duty rates (3% on top of the usual rate), but you may be able to obtain a refund from HM Revenue and Customs if you sell your previous home within 3 years.

Contact

To find out more about Stamp Duty Land Tax and the conveyancing process, please call Hayley on 0191 243 8167.