UK Chancellor Rishi Sunak has announced that homebuyers will not have to pay stamp duty on homes worth up to £500,000. The measure will last until 31 March 2021 in England and Northern Ireland. Stamp Duty Land Tax has been replaced by a Land and Buildings Transaction Tax in Scotland and a Land Transaction Tax in Wales.
The previous 0% stamp duty threshold was £125,000, or £300,000 for first-time buyers of properties worth less than £500,000.
Those buying a property under the £500,000 threshold will now pay nothing in stamp duty.
How much stamp duty will you have to pay when buying a residential property?
The following calculator and commentary is for general interest only and must not be relied on. It may not be up to date or complete, relates only to certain types of residential property in England or Northern Ireland and does not constitute advice. We can often help you to find suitable independent advisers, but you will always need to take specific advice from your property lawyers, accountants or other financial advisers on tax issues in specific situations.
Use our updated calculator to give you the correct sum of stamp duty you need to pay, by clicking the link below:
When is Stamp Duty paid?
When buying a property over a certain price, stamp duty is payable to the HMRC 14 days from the date of completion or you may risk a fine. Your solicitor or legal adviser should take care of this for you and ensure you don’t miss the deadline. Some buyers prefer to add on the Stamp Duty tax amount to their mortgage loan. Please speak to your mortgage provider.
What were the recent changes to Stamp Duty in England and Northern Ireland?
Stamp Duty Land Tax (SDLT) is a progressive tax paid when purchasing a freehold, leasehold or shared ownership residential property over £125,000 in England and Northern Ireland (separate taxes apply in Wales and Scotland). New SDLT rates were introduced in 2014’s Autumn Statement, introducing a sliding system based on thresholds and dependent on a property price. In July 2020, the Chancellor announced the temporary lifting of the tax-free sum to £500,000 until 31 March 2021.
Different SDLT rates and thresholds apply to non-residential property or mixed use land.
Before 2014 a ‘slab structure’ was in place with buyers paying a rate based on the ENTIRE property purchase price. The new rates are now payable only on the PORTION of a property price which falls within each band. As with every tax, there are those who will be better and worse off compared to the previous system.
How much stamp duty will I have to pay when buying a residential property?
Stamp Duty Tax Rates between 8 July 2020 and 31 March 2021 for residential properties purchased by individuals:
How to calculate the new Stamp Duty rate
So, if you bought a property for £850,000 you would pay no stamp duty on the first £125,000, then 2% on £125,000 to £250,000 and 5% above £250,000. (eg: £800,000 – £250,000 = £600,000 x 0.05 = £30,000 + £2,500 = £32,500).
As the property price increases the rate of pay increases within a certain tax bracket with percentages rising when a higher price threshold is reached. Under the new SDLT property over £925,000 – £1.5m will be taxed at a rate of 10% compared with 5% in 2014.
See historic SDLT rates.
Buy-to-let and second homes Stamp Duty 2018
From April 2016, property buyers in England and Wales will have to pay an additional 3% on each stamp duty band.
|Buy-to-let and second home Stamp Duty tax bands|
|Brackets||Standard rate||Buy-to-let/second home rate (April 2016)|
|Up to £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1.5m||10%||13%|