With dif­fer­ent rules for dif­fer­ent cir­cum­stances, Stamp Duty can be a con­fus­ing sub­ject. Don’t wor­ry, though, we here at Jack­son Bar­rett and Gass are hap­py to explain every­thing you need to know about Stamp Duty.

What is Stamp Duty?

Stamp Duty is a type of Land Tax that applies to both free­hold and lease­hold prop­er­ties. It applies whether you are buy­ing out­right or with a mortgage. 

If you are buy­ing a res­i­den­tial prop­er­ty in Eng­land or Ire­land that costs more than £125,000, you will have to pay Stamp Duty Land Tax on your pur­chase. How­ev­er, there are many vari­ables that impact the cost of Stamp Duty, which we will explain fur­ther down this blog post, including:

  • The price of the prop­er­ty you are buying 
  • If you are buy­ing an addi­tion­al prop­er­ty such as a sec­ond home 
  • Whether or not you are a first-time buyer

How Much Stamp Duty Will I Have to Pay?

Stamp Duty costs are cal­cu­lat­ed using sev­er­al rate bands”. You do not pay Stamp Duty on the first £125,000 of a prop­er­ty (unless you are buy­ing a sec­ond home). There­after, Stamp Duty Land Tax is cal­cu­lat­ed on the part of the prop­er­ty price falling with­in each rate band. You can use a Stamp Duty Land Tax cal­cu­la­tor to find out how much Stamp Duty you will pay on a prop­er­ty or sim­ply con­sult this handy chart. 

Property Price £0 - £125,000
Stamp Duty Rate Band 0%
Property Price £125,001 - £250,000
Stamp Duty Rate Band 2%
Property Price £250,001 - £925,000
Stamp Duty Rate Band 5%
Property Price £925,001 - £1.5 million
Stamp Duty Rate Band 10%
Property Price Over £1.5 million
Stamp Duty Rate Band 12%
Property Price Stamp Duty Rate Band
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 - £1.5 million 10%
Over £1.5 million 12%

Stamp Duty and Addi­tion­al Properties

If you are buy­ing an addi­tion­al res­i­den­tial prop­er­ty, such as a sec­ond home or a buy-to-let prop­er­ty, you will have to pay an extra 3% Stamp Duty Land Tax on top of the cur­rent rates for each band. Addi­tion­al­ly, you will start pay­ing Stamp Duty at a much low­er prop­er­ty price than you would on your first home (£40,000 or more). This does not apply to car­a­vans, mobile homes, or houseboats.

Do I Have to Pay Increased Stamp Duty if I Pur­chase a Sec­ond Prop­er­ty but I’m Sell­ing My First Property?

If you are pur­chas­ing an addi­tion­al res­i­den­tial prop­er­ty, with the intent to sell your main res­i­den­tial prop­er­ty, you will still have to pay the high­er Stamp Duty rates on your sec­ond prop­er­ty as you will tech­ni­cal­ly own two prop­er­ties. How­ev­er, if you sell (or even give away) your main prop­er­ty with­in 3 years of buy­ing a new home, you can apply for a Stamp Duty Land Tax refund for the high­er rate part of the Stamp Duty Land Tax bill on the new home.

Stamp Duty and First-Time Buyers

First-time buy­ers are eli­gi­ble for Stamp Duty relief, mean­ing you will not be charged Stamp Duty on the first £300,000 of your prop­er­ty. If the prop­er­ty you are buy­ing costs up to £500,000 you will pay no stamp duty on the first £300,000 but will have to pay Stamp Duty on the remain­ing amount up to £200,000.

If the prop­er­ty you are buy­ing is worth more than £500,000 you will not be eli­gi­ble for first-time buyer’s relief and will have to pay the stan­dard rates of Stamp Duty. In addi­tion, first-time buy­ers under Shared Own­er­ship schemes can now claim first-time buyer’s relief on homes worth up to £500,000.

IMPOR­TANT: If you are mar­ried, or are joint­ly buy­ing a prop­er­ty with anoth­er per­son, you must both be first-time buy­ers in order to be eli­gi­ble for Stamp Duty relief. 

How and When Do I Pay Stamp Duty?

Your solic­i­tor will han­dle the Stamp Duty return and any pay­ment, although you can do it your­self. You must sub­mit a Stamp Duty return and pay what you owe with­in 30 days of com­plet­ing the pur­chase of your home or you may incur penal­ties and have to pay interest. 

IMPOR­TANT: Even if your prop­er­ty costs less £125,000, and you don’t need to pay any Stamp Duty, you must still sub­mit a return.

Are you pur­chas­ing a res­i­den­tial prop­er­ty? Let us take the stress out of the legal side of things with our expert res­i­den­tial Con­veyanc­ing ser­vices. Get in touch and find out how we can help you buy your property.