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Stamp duty

Stamp Duty
Update: Recent changes

What do the changes to Stamp Duty Land Tax mean for me?

The Chancellor of the Exchequer, Rishi Sunak, has announced in his Summer statement a Stamp Duty Land Tax (SDLT) payment holiday is which will be effective from the Autumn. The measure has been introduced in response to the economic impact COVID-19 has had on the UK, and it is hoped the move will stimulate the housing market which has been hit heavily by the impact of the virus.

What has changed?

The Chancellor has announced that the Stamp Duty threshold has been increased to £500,000 for the next six months – so if you are buying a property below that threshold, you will no longer have to pay any Stamp Duty tax.

The move means a saving of thousands of pounds for home buyers. For example, anyone purchasing a property with an asking price of £300,000 under the current rules would pay SDLT of £5,000. This is broken down by £0 for the first £125,000, £2,500 or 2% for the next band of £125,000-£250,000, and a further £2,500 at 5% over £250,000. First-time buyers wouldn’t pay SDLT on a purchase at this price.

From the Autumn, home buyers will pay nothing on a £300,000 purchase. The Chancellor is hoping that this move will stimulate anyone thinking of buying a new home into making that purchase, spurred on by the saving on offer.

The change is only applicable to home purchases in England. Any review of the rules for Scotland and Wales house purchases will be a matter for each of the devolved Governments in those countries.

Update 15/07/2020: Changes to LBTT in Scotland

What do the changes to Land and Buildings Transaction Tax mean for me?

The Scottish government has announced a temporary rise in the threshold at which Land and Buildings Transaction Tax (LBTT) becomes payable by home buyers in Scotland. This ‘stamp duty’ holiday is great news for anybody planning on buying a home in Scotland – not just for those purchasing their first property – and could mean savings of thousands of pounds.

There is now no tax to pay on first homes costing less than £250,000. The measure came into effect on 15th July 2020 and will run until 31st March 2021.

Update 27/07/2020: Changes to LTT in Wales

What do the changes to Land Transaction Tax mean for me?

The Welsh government has announced a temporary rise in the threshold at which Land Transaction Tax (LTT) becomes payable by home buyers in Wales. From 27th July 2020, this ‘stamp duty’ holiday could save all purchasers – not just first-time buyers – thousands of pounds. It means no tax is payable on residential properties costing up to £250,000 and will last until 31st March 2020.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a fixed sum of money paid to the government upon purchase of property or land. In England and Northern Ireland, residential properties worth more than £125,000 require stamp duty to be paid upon purchase of the home (there is no stamp duty payable on homes priced less than this). For first-time buyers this limit is increased to £300,000.

How much tax is due depends on the property price.

In Wales the tax is known as the land transaction tax (LLT) and in Scotland as the land and buildings transaction tax (LBTT).

When is stamp duty payable?

A stamp duty land tax return must be filed and the tax paid – usually by your solicitor – within 14 days of completion on your new home. If you fail to meet this deadline you may be charged interest and penalties. If no stamp duty is due, you will still need to complete a return, unless the purchase price of the property is less than £40,000.

How much will I have to pay?

First-time buyers

When buying your first home you will not pay stamp duty on property costing up to £300,000 in England and Northern Ireland, or £175,000 in Scotland. If the price is above this, the amount you pay will depend on where you live. There is no first-time buyer relief in Wales.

In England and Northern Ireland you will pay 5% stamp duty, on anything up to £500,000. Property costing more than £500,000 does not attract first-time buyer relief at all, so you will pay the tax due

In Scotland you will pay stamp duty on property costing more than £175,000, according to that country’s standard rates.

If you are buying a home with somebody else then this has to be a first home for both of you, in order for you to be considered first-time buyers.

Stamp duty example calculations for first-time buyers

First-time buyer buying a property under £300,000
Property value at point of purchase: £300,000
0% stamp duty to pay

First-time buyer buying a new property over £500,000
Property value at point of purchase: £550,000
0% stamp duty to pay up to £125,000
2% stamp duty to pay from £125,000 to £250,000 = £2,500
5% stamp duty to pay from £250,000 to £550,000 = £15,000
Total stamp duty payable = £17,500

Home movers

If you are buying a new home to live in, and you have owned a home before, you will pay stamp duty on any property costing more than £125,000. If you are buying a home with someone else and it is not your first home, you will be eligible to pay stamp duty even if they are a first-time buyer.

Stamp duty example calculations for home movers

Stamp duty example calculations for current homeowners
Current homeowner buying a property under £125,000
Property value at point of purchase: £125,000
0% stamp duty to pay

Current homeowner buying a property under £250,000
Property value at point of purchase: £250,000
0% stamp duty to pay up to £125,000
2% stamp duty to pay from £125,000 to £250,000 = £2,500
Total stamp duty to pay = £2,500

Current homeowner buying a property over £300,000
Property value at point of purchase: £350,000
0% stamp duty to pay up to £125,000 of the value
2% stamp duty to pay from £125,000 to £250,000 = £2,500
5% stamp duty to pay from £250,000 to £350,000 = £5,000
Total stamp duty to pay = £7,500

What are the standard rates for SDLT?

In England and Northern Ireland

Minimum
purchase price
Maximum
purchase price
Stamp Duty
rate
£0 £125,000 0%
£125,001 £250,000 2%
£250,001 £925,000 5%
£925,001 £1.5 million 10%
Over £1.5 million 12%

In Wales

Minimum
purchase price
Maximum
purchase price
Stamp Duty
rate
£0 £180,000 0%
£180,001 £250,000 3.5%
£250,001 £400,000 5%
£400,001 £750,000 7.5%
£750,001 £1.5m 10%
Over £1.5m 12%

In Scotland

Minimum
purchase price
Maximum
purchase price
Stamp Duty
rate
£0 £145,000 0%
£145,001 £250,000 2%
£250,001 £325,000 5%
£325,001 £750,000 10%
£750,001 + 12%

Rates on second properties

If you are buying a second home, or a buy-to-let property, then you will not pay stamp duty on the first £40,000. For everything above that amount you will pay an extra 3% above standard rates, so for England and Northern Ireland:

In England and Northern Ireland
Minimum
purchase price
Maximum
purchase price
Standard stamp
duty rate
With additional
property stamp
duty rate
£0 £40,000 0% 0%
£0 £125,000 0% 3%
£125,001 £250,000 2% 5%
£250,001 £925,000 5% 8%
£925,001 £1.5m 10% 13%
£1.5,+ 12% 15%

FAQs (England)

I’m a first-time buyer, do I have to pay stamp duty?

All buyers can now benefit from England’s stamp duty holiday, whether you are a first-time buyer or not. This means you do not pay stamp duty on property costing up to £500,000 (England and Northern Ireland). Property costing more than £500,000 does not qualify for the stamp duty holiday, so you would pay standard rates.

Is stamp duty payable on leasehold properties?

The tax is due on all properties costing over £500,000, whether they are freehold, or leasehold. There may be an extra charge on leasehold properties, your solicitor will be able to advise you if this applies in your case.

What is the lower threshold for standard rate stamp duty?

The temporary stamp duty holiday in England means that the lower threshold is now £500,000.

How do I calculate how much stamp duty I will have to pay?

The Government stamp duty calculator is a useful tool for determining how much stamp duty you will have to pay: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax

If I haven’t sold my current home before I buy my new one, will I have to pay duty at the higher rate on my new property?

Yes, you will be liable for higher rate stamp duty on your new home as it is in effect a second residential property. However, if you subsequently sell you first home then you can apply for a refund of the higher rate portion of the duty paid.

The time limits for this are three years in England

FAQs (Scotland)

Does first-time buyer relief still exist?

Yes first-time buyer relief still exists, however, the new £250,000 threshold is greater than the firsttime buyer relief limit of £175,000. This means that until 31 March 2021 first-time buyer relief has no practical effect.

Is the change applicable to second homes?

No. Second homes will still attract an Additional Dwelling Supplement (ADS) levy, which remains unchanged.

The property I’m buying is above the £25,000 threshold – how much LBTT will I pay?

This depends on the value of the property you are buying, but until 31st March 2021 the standard bands are 5% for homes costing £250,001 - £325,000, 10% for homes costing £325,001 - £750,000 and 12% for homes costing over £750,000.

Do I still have to submit a tax return if there is no LBTT due?

Yes, any home costing more than £40,000 requires you to submit an LBTT return to Revenue Scotland and this does not change as a result of the new nil-rate band.

FAQs (Wales)

Does the change apply to first-time buyers only?

The change applies to all home buyers. There is no specific first-time buyer relief in Wales.

Is the change applicable to second homes?

No. Second homes and buy-to-let properties will continue to be subject to an additional levy of 3% above standard LTT rates.

The property I’m buying is above the £250,000 threshold – how much LTT will I pay?

This depends on the value of the property you are buying, but until 31st March 2021 the standard bands are 0% for homes costing up to £250,000, 5% for homes costing £250,001 - £400,000, 7.5% for homes costing £400,001 - £750,000, 10% for homes costing £750,001 - £1.5m and 12% for homes costing over £1.5m

Do I still have to submit a tax return if there is no LTT due?

Yes, any home costing more than £40,000 requires you to submit an LTT return to the Welsh Revenue Authority and this does not change as a result of the new nil-rate band.

Stamp duty example calculations for first-time buyers

First-time buyer buying a property under £300,000
A.

Property value at point of purchase: £300,000

0% stamp duty to pay

First-time buyer buying a new property over £500,000
A.

Property value at point of purchase: £550,000

0% stamp duty to pay up to £125,000

2% stamp duty to pay from £125,000 to £250,000 = £2,500

5% stamp duty to pay from £250,000 to £550,000 = £15,000

Total stamp duty payable = £17,500

Stamp duty example calculations for current homeowners
A.

Current homeowner buying a property under £125,000

Property value at point of purchase: £125,000

0% stamp duty to pay

Current homeowner buying a property under £250,000
A.

Property value at point of purchase: £250,000

0% stamp duty to pay up to £125,000

2% stamp duty to pay from £125,000 to £250,000 = £2,500

Total stamp duty to pay = £2,500

Current homeowner buying a property over £300,000
A.

Property value at point of purchase: £350,000

0% stamp duty to pay up to £125,000 of the value

2% stamp duty to pay from £125,000 to £250,000 = £2,500

5% stamp duty to pay from £250,000 to £350,000 = £5,000

Total stamp duty to pay = £7,500

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