What are the different stamp duty rates?
As mentioned above, SDLT is paid whenever you buy a property in the UK above a certain price and the purchase price will determine the rate you pay. The following table outlines the current thresholds and rates that are charged on a residential property.
The Chancellor's Autumn Statement (December 3rd 2014) announced sweeping changes to the way stamp duty is calculated in the UK. SDLT has been reformed into a progressive system - the previous slab system meant you would pay a single rate based on the whole property purchase price.
Under the new rules, you only pay the rate on the portion of the property value that falls within the new bands. This table shows the new thresholds and rates payable:
Property Purchase Price
Stamp Duty Rates
|£0 to £125,000||0%|
|£125,001 to £250,000||2%|
|£250,001 to £925,000||5%|
|£925,001 to £1.5 million||10%|
|Over £1.5 million||12%|
(bought by corporate bodies)
This might seem complicated so we've included an example below to better illustrate the way these changes affect how stamp duty is calculated. We will use the current national average purchase price for a family home of £273,000 (Based on data available from the ONS, September 2014)
Purchase Price Bands
|£0 to £125,000||£125,000||0%||£0|
|£125,001 to £250,000||£125,000||2%||£2,500|
|£250,001 to £925,000||£23,000||5%||£1,150|
|£925,001 to £1.5 million||£0||10%||£0|
|Over £1.5 million||£0||12%||£0|
|Total Purchase Price||£273,000||Total SDLT due||£3,650|
You can see that the total amount of stamp duty to be paid under the new rules is £3,650. Using the previous slab system, you would have paid 3% on the whole purchase price and had a bill for £8,190. So were you to buy a property for £273,000 today, this new progressive system would save you £4,540 which you could then put towards your deposit, a new kitchen, furniture or home improvements.
When do you pay stamp duty?
You have 30 days from the date of completion (when all the contracts are signed and dated) to pay the stamp duty. If you don't pay within this time you could be fined and have to pay interest on top. However, your solicitor or conveyancer will sort all of this out for you and will probably ask you to pay the bill immediately.
The Land and Building Transactions Tax (LBTT) will replace Stamp Duty (SDLT) in Scotland
The arrangements and rates outlined above are currently the same for all homebuyers in England, Scotland, Wales and Northern Ireland. However, in April 2015 Scotland will change the way stamp duty is calculated. It is likely that people spending less than £300,000 to buy their home will pay less tax (based on the pre December 2014 calculations) and those spending over that on a property will pay more. The new Land and Building Transactions Tax (which is due to replace Stamp Duty in Scotland) will also have a progressive structure designed to remove the house price distortions that were associated with the old slab system.
This means that homebuyers in Scotland will pay no tax on properties costing less than £135,000, a 2% rate will apply to the portion of the property value between £135,000 and £250,000 and a further 10% for those between £250,000 and £1 million. A new rate of 12% will be charged on properties worth more than £1m. Further information can be found on The Scottish Government website.