TL;DR
In short
- Let’s start with some basic information about stamp duty.
- On 31 October 2024, the latest changes regarding stamp duty land tax came into effect.
- A discount has been introduced for those buying their first property (first time buyers) in mind, relief was introduced a few years ago.
- Sometimes the question of tax on leasehold properties comes up.
- As you can see, calculating the amount due can be a little complicated.
If you are planning to buy a property in the UK or are going through this process, you will certainly have come across Stamp duty land tax. In this article you will find not only an explanation of this term, but also a table with the current rates and a calculator to save you some time when counting :)
Stamp duty land tax- all the most important information about it
Stamp duty land tax - definition
Let’s start with some basic information about stamp duty.
Stamp duty land tax (SDLT) is a tax on the purchase of property (house, flat, land) in England and Northern Ireland. As a general rule, the tax liability lies with the purchaser and the time to pay it is 14 days from the date of purchase.
Source: Optimal Solicitors
However, it is worth noting that stamp duty will not have to be paid in every situation. There are several exceptions to this obligation, which we will go into later in this article.
In the definition we gave above, there was a mention of England and Northern Ireland. Does this mean that buying a house in Scotland does not involve paying tax? Unfortunately, no. There are also transaction taxes in both Wales and Scotland, but they are named differently and their rates are not the same as in England. The Welsh equivalent of stamp duty is called land transaction tax, while the Scottish equivalent is called land and buildings transaction tax.
Stamp duty land tax- rates in 2024
On 31 October 2024, the latest changes regarding stamp duty land tax came into effect. The law will come into force on 1 April 2025 and, in principle, most buyers will be worse off than before.
Value of property Stamp duty land tax rate before 31 March 2025 Stamp duty land tax rate after 31 March 2025
£0-125,000 0% 0%
part between £125,001-250,000 0% 2%
part between £250,001-925,000 5% 5%
part between £925,001-1,500,00 10% 10%
part above £1,500,001 12% 12%
Stamp duty land tax rate table
What is the point of “parts”? As a general rule, stamp duty land tax is supposed to affect the wealthiest people the most. If you buy a property for, say, £100,000, the tax calculation is very simple - the amount due is simply 0. It will be slightly different if you buy a property for, say, £900,000. Just for the sake of formality, we would also add that our calculations apply to people without first time buyer status. The tax payable is:
According to the rate valid until March 31:
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Tax for the part £0-125,000: £0
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Tax per part £125,000-250,000: £0
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Tax per part £250,001-900,000: £32,500
Total amount payable: £32,500
The changes introduced in the autumn do not concern the way the tax is calculated. The only thing that differs is the tax thresholds. In effect:
According to the rate valid after March 31:
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Tax for the part £0-125,000: £0
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Tax per part £125,000-250,000: £2,500
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Tax per part £250,001-900,000: £32,500
Total amount payable: £35,000
The above sums are impressive, aren’t they? Fortunately, buying a property for £900,000 doesn’t happen very often. You can find current property prices in the UK in our article on the subject.
You can also find current stamp duty rates on the UKGovernment website.
Stamp duty land tax and first time buyer status
A discount has been introduced for those buying their first property (first time buyers) in mind, relief was introduced a few years ago. It is not new and the October changes did not change the thresholds or rates. The current November 2024 stamp duty exemption limit is £425,000, but it’s worth remembering that this discount only applies if the value of the property is under £625,000. In practice, this means that if you don’t own any property (not just in the UK), you’re unlikely to pay a pound of tax.
Unfortunately, there is bad news for those buying a second or subsequent property - if you buy more than £40,000, you will be charged 3% more tax than standard. (Source: Moneyhelper). The direction of the current changes clearly suggests to us that the government is aiming to discourage people from buying rental property, as SDLT rates clearly affect the final price of the house or flat being purchased.
Those who do not have UK resident status will also pay a higher rate of stamp duty land tax. In this case, the threshold amount is also £40,000, but the increase is 2 instead of 3%. Source: Moneyhelper
Stamp duty for properties under leashold
Sometimes the question of tax on leasehold properties comes up. Unfortunately, stamp duty must also be paid in this situation, and its rates are exactly the same as for a freehold purchase. The form of buying also changes nothing - whether you pay cash or take out a loan, you have to pay stamp duty land tax.
Tax calculator
As you can see, calculating the amount due can be a little complicated. That is why we have prepared a calculator for you that will make the whole process much easier.
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Other stamp duty calculators
You will also find other calculators on the internet. We can confidently suggest two options:
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Stamp Duty calculator calculator on the government’s Money Helper website. The calculator is constantly updated and allows you to calculate the tax accurately once the transaction date (completion date) is entered.
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Calculate stamp duty (SDLT) in England and Northern Ireland, a very clear calculator that allows you to download the calculation as a PDF file.
When and how do I pay stamp duty land tax?
The duty to pay stamp duty occurs on the date of completion of the transaction, that is, completion. According to the regulations, the purchaser has equally 2 weeks to submit the SDLT return to HMRC. In practice, the new owner very rarely pays the tax himself - this is done by a solicitor. It is up to him/her to both file the return and pay the fee, which of course has to be paid back. Usually, the settlement with the solicitor takes place on the day of completion and it is then that the buyer pays the tax.
Of course, nothing prevents you from filing the return and paying the tax yourself. A comprehensive guide can be found on the Stamp Duty Land Tax online and paper returns page.
Summary
The information we have gathered should be comprehensive, but if you have any questions, we are of course here to help. If you are planning to buy a property in the UK, we encourage you to get in touch. Our advisers will help you at every stage of the transaction and the whole process will go smoothly and in a pleasant atmosphere :)
By the way, we encourage you to read other articles on our blog. Here are a few posts which you may find useful:
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FAQ
Frequently asked questions
Stamp duty land tax - definition?
Let’s start with some basic information about stamp duty.
Stamp duty land tax- rates in 2024?
On 31 October 2024, the latest changes regarding stamp duty land tax came into effect.
Stamp duty land tax and first time buyer status?
A discount has been introduced for those buying their first property (first time buyers) in mind, relief was introduced a few years ago.
Stamp duty for properties under leashold?
Sometimes the question of tax on leasehold properties comes up.
Tax calculator?
As you can see, calculating the amount due can be a little complicated.