Stamp Duty Land Tax - how much?

by Gareth Overton, head of residential sales at Henry Adams LLP

Budgeting for Stamp Duty Land Tax is essential before making an offer on your next home so it can be properly factored in to your finances.

Fortunately the sharp thresholds of yesteryear no longer apply but it’s a complicated tax with rising ‘bands’ attracting higher rates.

In the financial year to April 2018, more than a million residential transactions incurred the tax which resulted in over £9bn in revenue for HMRC. 

Property under £125,000 is free of Stamp Duty tax, as is the first £125,000 of all transactions while the highest rate of 12% applies on any portion of value above £1,500,000 (rising to 15% if the property is an additional home).

The final amount due has to be paid to HMRC within 30 days of completion which is normally done by your solicitor or conveyancer. They’ll also be able to explain whether you qualify for any relief, exemptions or additional tax bands.

Recent changes to Stamp Duty include the additional 3% on top of normal SDLT rates introduced in April 2016 which applies when the purchase means the owner will have more than one residential property - even if it’s not in the UK.

The vast majority of our property investors factor in the additional amount in terms of their long term income and capital growth objectives.

Relief options available include first time buyers relief which was introduced in November 2017 on property purchases up to £500,000, provided it’s bought as the owner’s only or main residence. Some 22% of all residential sales in the South East between November 2017 and March 2018 attracted first time buyer relief on Stamp Duty.

First time buyers won’t have to pay any Stamp Duty when buying their first home up to £300,000 and on any amount between £300,000 and £500,000 they pay 5% of the value in this band.

To make budgeting for your next property a little more straightforward, whichever price bracket it falls into, we’ve included a Stamp Duty calculator here on our website.

Just type in the value of the property you’re planning to buy, answer a couple of straightforward questions to see if the main extra costs or relief might apply, and let the technology do the rest.

Then once your offer is accepted, simply ask your solicitor to confirm the figures so there are no Stamp Duty surprises further down the line.