Stamp Duty Is A Progressive Tax, Which Means It Increases As The Taxable Amount Increases

So What Are The Stamp Duty Brackets And Increments?

It’s common knowledge that when you buy a new home, be it old or new, there’ll be Stamp Duty to pay. 

It needs to be paid when purchasing a new or existing leasehold, freehold property, shared ownership or residential property that has a value over £125,000. That threshold is raised to £150,000 if the property or land is for non-residential use. 

Stamp Duty applies across England, Northern Ireland and Wales. 
In Scotland it is a separate Land and Buildings Tax that must be paid instead. The total value you pay stamp duty on is usually the price you pay for the property, although sometimes it can include other types of payment such as the transfer of a debt or works or services.

Your stamp duty tax return must be completed and returned to HMRC and paid within 30 days of completion and if you have a solicitor, agency or conveyancer, they will usually file this on your behalf.

There are different stamp duty increments which affect how much stamp duty you need to pay.

Starting at 2% and increasing to the current maximum of 12% depending on the value of the property you are purchasing. The table below will help you calculate how much you may need to pay on residential property:
Purchase Price Of Property Stamp Duty Rate
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 - £1,500,000 10%
£1,500,001 and over 12%
These stamp duty increments are a result of the Government reforms implemented in 2014 as part of the Autumn Statement. This has helped make buying a new home much more affordable for first time buyers in particular.

Before the reform, stamp duty was a single rate calculated on the entire property purchase price. That meant if you bought a home worth £250,000, you’d pay 2% stamp duty which would cost you an extra £2,500. But buy a home costing £250,001 and you’d move up into the next band and be paying £7,500 in stamp duty!

Today stamp duty is still paid on a percentage of the property purchase price, however the higher stamp duty rate is only paid on the portion of the purchase price which exceeds the higher threshold. For example, a £300,000 property would cost you £5,000 in stamp duty. Here’s the maths behind it:
  • No stamp duty is paid on the first £125,000, because the stamp duty rate is 0%
  • 2% stamp duty is paid on the portion of the purchase price between £125,001 and £250,000
  • 5% is paid on the portion of the purchase price between £250,001 and £925,000

You can claim relief to reduce the amount of stamp duty you are required to pay, if you meet any of the following criteria:
  • You have multiple dwellings
  • You are a buildings company buying a residential home
  • You are an employer buying an employee’s house
  • Your local authority is making compulsory changes
  • You are a charity
  • It is a right to buy property
  • You are a registered social landlord

More information on all these cases for SDLT relief can be found here on the Government website. You will also find more information on reasons which exempt you from paying SDLT, which includes:
  • If a property is left to you in a will
  • If you use other property financial arrangement, for example to comply with Sharia Law
  • If you buy a freehold property for less than £40,000

A tax return or SDLT as it is also known, must still be completed to claim the relief, even if no tax is due.

Publish date: 22/09/2017

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