In England and Northern Ireland, you are liable to pay Stamp Duty Land Tax (otherwise known as Stamp Duty or SDLT) when you purchase a property or a piece of land over a certain price.
This tax is payable to Her Majesty’s Revenue and Customs (HMRC) and must be paid within fourteen days of the completion of a purchase.
SDLT is calculated based on where the purchase price falls within a set banding system and can also be affected by whether the property is your first property, your main residence or an additional property.
The two main rates of Stamp Duty Land Tax are the standard rate (sometimes referred to as the lower rate) and the higher rate.
If the standard rate applies to your transaction, then you will only need to pay SDLT if the purchase price exceeds £125,000.00. The following chart explains the banding system which is then used to calculate the level of SDLT to be paid on any portions of the purchase price over this amount.
| Property Purchase Price | SDLT rate |
| Up to £125,000 | 0 |
| The next £125,000 (the portion from £125,001 to £250,000) | 2% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
If you are buying an additional residential property (such as a second home or a buy to let property), and you are purchasing for £40,000.00 or more, you will be required to pay the higher rate of SDLT. This means that you will pay a 3% surcharge on the SDLT rates shown in the above chart. Unless you are replacing your main residence, the higher rate will apply in every case where the property that you are purchasing will not be the only property that you own anywhere in the world.
To be replacing your main residence, you must have sold your previous main residence and be moving into the property that you have purchased. The sale of your previous main residence must have completed on the same day as the purchase, or within the three years prior to the purchase.
There are also special SDLT rate calculations for:
The most common example of stamp duty relief is when you are buying your first property. If you, and anyone else that you are purchasing with, have not previously acquired a major interest in a property anywhere in the world, then you may be entitled to a Stamp Duty Land Tax discount.
If you are a first-time buyer who is purchasing a property for £300,000.00 or less, you would be fully exempt from SDLT. If the property is between £300,000.00 and £500,000.00, you would only pay SDLT on the amount over the first £300,000.00. However, if the purchase price exceeds £500,000.00, you would no longer qualify for first-time buyer’s relief and would be required to pay the standard rate of SDLT on the full purchase price.
A transaction may also be exempt from Stamp Duty when a couple divorces, separates or ends their civil partnership and have agreed to transfer a portion of their property’s value between them. This would especially be the case if the transfer is being made in accordance with the terms of a court order.
Other examples of when SDLT relief may be claimed include:
It is sometimes possible to request a Stamp Duty Land Tax refund if you have overpaid, if you didn’t claim a relief that you were entitled to, or if you have subsequently sold your previous main residence.
The most common reason for requesting a refund is when someone has purchased a new home before selling their previous main residence. If you buy a new main residence but there is a delay in selling your previous main residence, you will still have to pay the higher rate of SDLT on completion of the purchase as you would not have replaced your residence yet.
However, if you then sell or give away your previous main home within three years of buying your new home, you can apply for a refund of the 3% surcharge. You must send the refund request to HMRC within three months of the sale of the previous main residence, or within twelve months of the SDLT submission date for the purchase of the new residence – whichever comes later.
The refund will be granted in any case where there has been the disposal of a property that was your main residence at any point during the three years leading up to the purchase of your new main residence. Please note, however, that merely occupying a property will not in itself make it a main residence. There needs to be permanence and an expectation of continuing occupation to establish a property as a main residence.
If you would like to contact us for any further advice on Stamp Duty and how you can ensure that you are not overpaying, you can choose one of the following:
