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Stamp Duty Land Tax Explained

Contributed by Sussex SEO
29 March, 2019


Confused about Stamp Duty Land Tax and the associated rates? Here's a helpful article that will explain everything you need to know.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax, abbreviated to SDLT, is a government tax that is charged whenever you purchase a property that must be paid within 14 days of purchasing your new home. The rates that you pay will depend on the price of the property and also if you're purchasing a second home. First-time buyers are typically exempt from paying stamp duty.

Stamp Duty Land Tax Rates

The rate of stamp duty that you pay will depend on a number of factors;

  • Type of property being purchased
  • Intended use such as residential, non-residential, or mixed
  • Value of property being purchased
  • Number of properties you own

There are also several different bands of stamp duty that depend on the overall cost of the property, for instance;

  • 0% is paid on the first GBP125,000 of a property including shared ownership properties if the share is under this value
  • 2% is paid on property priced between GBP125,001 and GBP250,000
  • 5% is paid on property priced between GBP250,001 and GBP925,000
  • 10% is paid on property priced between GBP925,001 and GBP1,500,000
  • 12% is paid on property priced GBP1,500,001 and over

As an example, a property valued at GBP150,000 will incur stamp duty of GBP500.

  • 0% for the first GBP125,000 (GBP0)
  • 2% for the remaining GBP25,000 (GBP500)

For another example, a house valued at GBP500,000 will incur stamp duty of GBP15,000.

  • 0% for the first GBP125,000 (GBP0)
  • 2% between GBP125,001 and GBP250,000 (GBP2,500)
  • 5% between GBP250,001 and GBP500,000 (GBP12,500)

If it's your second home (such as buying to let or buying a second home for holiday purposes) then an additional 3% is added to each band. This means a second property that costs GBP500,000 will incur stamp duty of GBP30,000.

  • 2% for the first GBP125,000 (GBP3,750)
  • 5% between GBP125,001 and GBP250,000 (GBP6,250)
  • 8% between GBP250,001 and GBP500,000 (GBP20,000)

Calculating stamp duty may seem difficult or even confusing, so it's a good idea to make quick work of the calculations by simply using a Stamp Duty Land Tax calculator. Not only will it give you the amount you need to pay, but also break down the costs so it's easier to understand. (Stamp Duty Calculator: https://www.lendingexpert.co.uk/stamp-duty-calculator/)

Stamp Duty Land Tax for First-Time Buyers

If the property value is up to GBP300,000 then first-time buyers are exempt from paying stamp duty. Properties up to GBP500,000 will only pay stamp duty on the GBP200,000. If your property is over GBP500,000, then you do not qualify for stamp duty exemption. To conclude, here are the conditions you must meet to be exempt:

  • It's your first home (have never owned a property before, no property abroad and can own commercial property)
  • If it's a joint purchase, both parties involved must be first-time buyers
  • You're buying a home that you will live in
  • Your property is not in Scotland or Wales
  • Your property is under GBP300,000 (full exemption)
  • Your property is under GBP500,000 (partial exemption; full exemption under GBP300,000, stamp duty paid on remaining GBP200,000)

For example, if your first property costs GBP500,000, you will only need to pay GBP10,000 in stamp duty.

  • 0% for the first GBP300,000 (GBP0)
  • 5% for the remaining GBP200,000 (GBP10,000)


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