When you buy a property in England, you must pay Stamp Duty Land Tax, more commonly referred to as ‘stamp duty’. The amount you pay is based on several variables including how much the property costs and whether or not you’re already a homeowner.
If you’re curious about stamp duty on residential properties and how much you’ll have to pay when buying your home, read on to find out more…
Stamp duty is paid by the buyer when purchasing a property over £125,000 and the money goes straight to the government. The amount of tax you’ll pay is calculated based on the cost of the property using a sliding scale.
It’s useful to know how much stamp duty you need to factor into your moving costs.
Use this stamp duty calculator to work out how much tax you’d pay for a house/flat that will be your only residential property:
| Property value | Stamp duty rates |
| Up to £125,000 | 0% |
| The next £125,000 (the portion £125,001 to £250,000) | 2% |
| The next £675,000 (the portion £250,001 to £925,000) | 5% |
| The next £575,000 (the portion £925,001 to £1.5 million) | 10% |
| The remaining value above £1.5 million | 12% |
If you’re buying a second residential property you’ll usually pay an additional 3% on top of these rates.
Example:
You’re buying a house for £350,000 and it will be your only residential property. Refer to the stamp duty calculator to work out how much tax you’ll have to pay i.e.:
Total stamp duty to pay = £7,500
Stamp duty rates do change from time-to-time, so it’s worth checking before you make any assumptions.
If you are a first time buyer, you may be eligible for discounted stamp duty as long as both of the following are true:
The discounted stamp duty rates are also offered to those who bought their first home before 8th July 2020.
If the above applies to you, use this stamp duty calculator for first time buyers:
| Property value | Stamp duty rates |
| Up to £300,000 | 0% |
| The remaining value up to £500,000 | 5% |
Keep in mind that even if you’re a first time buyer, if you’re purchasing property over £500,000 then the discounts do not apply and you’ll pay the usual stamp duty rates on the full amount.
If you’re already a homeowner and are buying an additional property that costs more than £40,000, you will pay additional stamp duty at rates that are 3% higher i.e.:
| Additional property’s value | Stamp duty rates |
| Up to £125,000 | 3% |
| The next £125,000 (the portion £125,001 to £250,000) | 5% |
| The next £675,000 (the portion £250,001 to £925,000) | 8% |
| The next £575,000 (the portion £925,001 to £1.5 million) | 13% |
| The remaining value above £1.5 million | 15% |
If you own a single property and are moving home but have not sold your property before completion on the new purchase, you will own two properties and will have to pay the higher stamp duty rates.
However, if you then sell your previous home within 36 months you can apply for a refund of the additional tax you had to pay.
You must pay any stamp duty within 14 days of completion. Your estate agent, solicitor or conveyancer will usually do this on your behalf.
It’s worth remembering that stamp duty applies to the land purchase. Therefore, the value of any removable fittings that are included e.g. freestanding furniture, carpets and curtains can be subtracted from the property price when calculating your stamp duty.
Talk to the vendor, agree a price for these items and ensure that it is noted in your contract. This is a good way to ensure you don’t pay any unnecessary tax and your solicitor or conveyancer can help with the process.
The concept of stamp duty can feel a little overwhelming, especially when there are so many other things to think about during a property purchase.
If you have any questions at all or would like help with your stamp duty calculations, get in touch. Our experienced team at Charters will be happy to answer all your questions.
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