How to calculate stamp duty
Buying in England and Northern Ireland (NI)
The standard rate bands for stamp duty are as follows*:
- 0% stamp duty = on first £0 - £125,000 of property
- 2% stamp duty = on next £125,001 - £250,000 of property
- 5% stamp duty = on next £250,001 - £925,000 of property
- 10% stamp duty = on next £925,001 - £1.5 million of property
- 12% stamp duty = above £1.5 million of property
Figures accurate as of Jun 2019 as shown at gov.uk
The rate of stamp duty you’ll pay isn’t confined to just one of these bands. Each band applies to the equivalent portion of the property price. For example, if you bought a house for £300,000, the stamp duty you’d pay would be:
- The first £125,000 x 0% = £0
- The next £125,000 x 2% = £2,500
- The final £50,000 x 5% = £2,500
Total stamp duty = £5,000
First-time buyers in England and NI
If you’re a first-time buyer, you’ll be able to benefit from some stamp duty relief on properties up to the value of £500,000.
So when you’re buying a home up to the value of £300,000, you won’t have to pay any stamp duty at all.
When you buy a property of between £300,000 and £500,000, you won’t have to pay anything on the first £300,000, but you will have to pay a rate of 5% for the remaining portion.
For example, on a property for the value of £450,000, your stamp duty would be:
- The first £300,000 x 0% = 0%
- The remaining £150,000 x 5% = £7,500
Total stamp duty = £7,500
To be eligible to receive this discount, you’ll need to meet the following criteria:
- All parties involved in purchasing the property must be first-time buyers
- Your property can’t exceed a value of £500,000
If you’re a first-time buyer and the property you are buying is over £500,000, you’ll be required to follow the standard rate bands.
Stamp duty Scotland
For a single property purchase, no tax is paid on the first £145,000.
Between £145,000 and £250,000 buyers pay 2% within this band, and 5% on the part between £250,000 and £325,000, 10% within the next band up to £750,000 and 12% over that.
The initial threshold for first-time buyers in Scotland is £175k.
Stamp duty Wales
LTT is usually exempt on the first £180,000 of the property.
Between £180,000 and £250,000 buyers will pay 3.5% within this band, 5% on the part between £250,000 and £400,000, 7.5% on the part between £400,000 and £750,000, 10% within the next band up to £1.5 million, and 12% over that.
There’s currently no relief for first-time buyers under the Welsh system, but the higher zero tax threshold of £180k should represent most first-time purchases.
Buy-to-let stamp duty & stamp duty on a second property
Calculating stamp duty on second homes is different. If you’re buying a second home – meaning that you now have multiple properties – or a buy-to-let property, you’ll be required to pay an additional 3% on the standard stamp duty rates.
This rate applies to properties over £40,000, but excludes mobile homes, houseboats, and caravans.
If you’re buying a new home but you’re not a first-time buyer, you’ll only be required to pay the standard stamp duty rates. But if your main residence hasn’t been sold by the time you complete your new purchase, you’ll have to pay the higher rates given that you technically own two properties.
Thankfully, you’ll be able to get a refund once you’ve sold your original home – as long as it’s within 36 months of the original purchase.
Buying a leasehold property
Stamp duty isn’t impacted by the tenure of the property. So if you’re thinking of buying a leasehold property rather than a freehold, you won’t need to make any special arrangements.
Buying a commercial property
Calculating stamp duty on land and non-residential property (including mix-use land and property) is also different - you’ll pay land tax on increasing portions of the property for transactions over £150,000.
When is stamp duty not applicable?
There are a couple of scenarios where stamp duty land tax isn’t required:
- If you’re buying a property valued below £125,000
- If you’re transferring the deeds of your home to someone