The Mortgage Guide: Stamp Duty
Stamp duty has changed. Rates for additional homes such as Buy to Let properties are going up. Here's what you need to know to understand the way stamp duty works and how much stamp duty you will have to pay.
What is stamp duty and who pays it? Stamp Duty - Stamp Duty Land Tax (SDLT) official jargon - is a tax you pay when you buy a home The buyer pays stamp duty - not the person selling Stamp duty applies to both freehold and leasehold purchases over £125,000
How much stamp duty do I have to pay?
See the table below for current stamp duty rates.
Stamp Duty Rates
|Purchase price of property||Stamp duty rate||Stamp duty rent for additional properties|
|Up to £40,000 ||0 ||0 |
|Over £40,000 - £125,000 ||0 ||3% |
|Over £125,000 - £250,000 ||2% ||5% |
|Over £250,000 - £925,000 ||5% ||8% |
|Over £925,000 - £1.5 million ||10% ||13% |
|Over 1.5 million ||12% ||15% |
Higher rates of stamp duty are charged on the purchase of additional properties like buy-to-lets and second homes.
Stamp duty calculator
Stamp duty is calculated in the same way income tax works. For example, if the agreed purchase price is £275,000, stamp duty (if this is the first property you own) is calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total stamp duty payable = £3,750
To calculate exactly how much stamp duty you will need to pay, use our free stamp duty calculator
Does stamp duty apply to fixtures and fittings?
- Stamp duty does NOT apply to removable fixtures or "chattels" like freestanding furniture, carpets or curtains. But it does apply to fixtures and fittings like bathroom and kitchen fittings, and built in wardrobes, which are attached to the building
- You can reduce your stamp duty bill by subtracting the value of removable fittings from the total price of the property. For example, if carpets are included in the sale of a flat, the buyer and seller must agree a realistic price which reflects their age and quality, and then subtract it from the total price to calculate the stamp duty
- Buyers have been known to try to reduce their stamp duty bills by massively exaggerating the value of fixtures, but the HMRC has cracked down on this. You should expect to be able to justify the value of the fixtures to the taxman
Are there any exceptions?
- Homes registered to companies rather than individuals and cost more than £500,000 have a rate of 15%
- Charities may be able to get relief from stamp duty when they buy land and property for charitable purposes
- Right to Buy transactions may qualify for stamp duty discounts
- A relief from stamp duty may be available where a registered social landlord buys land and property
- Zero-carbon homes (including flats) under £500,000 are exempt from stamp duty. Zero-carbon homes over £500,000 have their stamp duty bill reduced by £15,000
- A full list of stamp duty (STLD) exemptions and reliefs are listed on the HMRC website
When do I have to pay stamp duty?
You have to pay within 30 days of the day on which you are entitled to take possession of your new house. You still have to submit a return even if you are not due to pay any stamp duty on the purchase price of your property, unless the property costs less than £40,000. Your solicitor or conveyancer should ensure that you do not miss the deadline.
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