What is stamp duty?

We often get asked by clients how much they would currently have to pay towards Stamp Duty.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax levied on the purchase of property in England and Northern Ireland.

SDLT is charged at different rates depending on the purchase price of a property. There are several stamp duty tax bands with rates rising from lower to higher bands.

On 23rd September 2022 the initial zero rate stamp duty threshold was increased from £125,000 to £250,000.

At what point do you have to pay stamp duty?

Stamp duty now needs to be paid within 14 days after completing on a property purchase. The 14-day period for submitting a stamp duty return has been effective from March 2019 and has been reduced from 30 days.

SDLT returns will be submitted by a solicitor or conveyancer acting on behalf of you.

What are the current stamp duty rates?

Stamp duty calculations and rates have been updated to reflect changes following the mini-budget announced on the 23rd of September 2022.

The freehold residential stamp duty rates in England and Northern Ireland are shown in the tables below listed below, followed on by a few examples.

The table below shows stamp duty rates from 23rd September 2022 when the initial zero rate threshold was increased from £125k to £250k.

* An additional property purchased for less than £40k will attract 0% tax. For purchases from £40k to £250k the SDLT rate will be 3% on full purchase price.

3 different examples of Stamp duty charges when buying property:

1) First Time Buyer, buying a property valued at £300,000

Tax Band         %       Taxable       Sum       Tax
less than       £425k      0(5)**      £0           £0
£425k to       £625k       5              £0           £0
£625k to       £925k       5              £0           £0
£925k to       £1.5m      10             £0          £0
rest over       £1.5m      12             £0          £0

As the property is valued below the £425,000 Threshold, there is no Stamp Duty to be paid.

2) A Home Mover, purchasing a property valued at £300,000

Tax Band         %         Taxable        Sum                  Tax
less than      £250k           0             £0                       £0
£250k to       £925k           5           £50,000           £2,500
£925k to      £1.5m           10           £0                       £0
rest over      £1.5m           12           £0                       £0

      a) £300,000 – £250,000= £50,000

      b) £50,000 x 5%= £2,500 (Total Stamp Duty to pay)

3) Additional property purchase also valued at £300,000

Tax Band          %       Taxable        Sum         Tax
less than       £250k       3           £250,000      £7,500
£250k to       £925k        8          £50,000        £4,000
£925k to       £1.5m       13         £0                 £0
rest over       £1.5m       15         £0                 £0

      a) £250,000 x 3%= £7,500

      b) £50,000 x 8%= £4,000

      c) £7,500+£4,000= £11,500 (Total Stamp Duty to pay)

For further information with regards to how much you will be paying for Stamp Duty, please do feel free to call one of our financial advisors who will be able to assist you with your queries.


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