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Stamp Duty for First Time Buyers

If you are a first time buyer buying a property for less than £300,000 you shouldn't pay any stamp duty.
First time buyers purchasing properties between £300,000 to £500,000 will also see a reduction in the amount of SDLT they pay, paying SDLT at 5% on the amount of the purchase price in excess of £300,000.


CURRENT STAMP DUTY RATES FOR FIRST TIME BUYER


Property or lease premium or transfer value 
SDLT rate
Up to £300,000  Zero
The next £625,000 (the portion from £300,001 to £925,000)  5%
The next £575,000 (the portion from £925,001 to £1.5 million)  10%
The remaining amount (the portion above £1.5 million)  12%

EXAMPLE

If you buy a property for £350,000, the SDLT you owe is calculated as follows:
0% on the first £300,000 = £0
5% on the final £50,000 = £2,500
Total SDLT = £2,500


You can read the full Government paper on SDLT relief for first time buyers on the Gov.UK website.

SDLT on Additional Residential Properties - Policy Paper Published

HMRC has today published its policy paper relating to higher SDLT (Stamp Duty Land Tax) rates on purchases of additional residential properties, such as 'buy to let' purchases and 'second homes'.

A higher rate of Stamp Duty was originally proposed in the Spending Review and Autumn Statement 2015, forming part of the government's Five Point Plan for housing, with a consultation then running between 28th December 2015 and 1 February 2016 before the final policy then came into force.

The new higher rate of stamp duty will be charged on purchases of additional residential properties from 1st April 2016, and will be three percentage points above the current SDLT rates.

Read our guide to SDLT rates for additional residential property purchases or read the full Policy Paper on the HMRC website.

Stamp Duty Rates for Second Homes and Buy to Let purchases

You must pay Stamp Duty Land Tax (SDLT) on any residential property where the purchase price is over £125,000.

If the property is being purchased as a second home or a buy to let property, or at the end of the day of the transaction, if you will own two or more residential properties and are not replacing a main residence, you will have to pay the higher rate of Stamp Duty Land Tax that are applicable on purchases of additional residential properties from 1st April 2016 onward.

You can use our Stamp Duty Calculator to find out how much SDLT you will have to pay on your additional property purchase.

Stamp Duty Rates for Additional Property Purchases

Property or lease premium or transfer value Old SDLT Rate New SDLT rate
Up to £40,000 Zero Zero
£40,000 - £125,000 (on the portion from £0 - £125,000) Zero 3%
The next £125,000 (the portion from £125,001 to £250,000) 2% 5%
The next £675,000 (the portion from £250,001 to £925,000) 5% 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 10% 13%
The remaining amount (the portion above £1.5 million) 12% 15%

Example

If you buy an additional property for £280,000, the SDLT you owe is calculated as follows:

3% on the first £125,000 = £3.750
5% on the next £125,000 = £6,250
8% on the final £30,000 = £2,400
Total SDLT = £12,400

Before April 1st 2016, the Stamp Duty payable would have been only £4,000, so the amount due has more than trebled.

You can read more about SDLT on residential property purchases in our help and advice section.

New Commercial Stamp Duty Rates Announced

In today's Budget, the Government has announced plans to charge no SDLT (Stamp Duty Land Tax) on commercial properties being purchased for £150,000 or less.

The rates will come into force at midnight, and apply to commercial property purchases from Thursday 17th March 2016 onwards - though transitional arrangements will be in place for purchases that are under way.

The treasury estimates that these changes will reduce the tax bill on around 90% of commercial property purchases, whilst also bringing in an extra £500m a year for the treasury, from the 9% of transactions it estimates will be affected by the higher rates.

The new SDLT rate will be zero for commercial property purchases up to £150,000, with a duty of 2% payable on the next £100,000 of the property value, rising to 5% for the remainder of the value over £250,000. See our commercial stamp duty rate table for further details.

 

Stamp Duty on Commercial Properties

On Thursday 17th March 2016, new SDLT (Stamp Duty Land Tax) rates were introduced for commercial properties.

Commercial Stamp Duty Rates

Property or lease premium or transfer value SDLT rate
Up to £150,000 Zero
The next £100,000 (the portion from £150,001 to £250,000) 2%
The remaining amount (the portion above £250,000) 5%

Example

If you buy a commercial property for £280,000, the SDLT you owe is calculated as follows:

0% on the first £150,000 = £0
2% on the next £100,000 = £2,000
5% on the final £30,000 = £1,500
Total SDLT = £3,500

The Stamp Duty rates for residential properties are different.

Stamp Duty on Residential Properties

You must pay Stamp Duty Land Tax (SDLT) on any residential property where the purchase price is over £125,000, unless you are a first time buyer.

You can use our Stamp Duty Calculator to find out how much tax you will have to pay.

Current Stamp Duty Rates

Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

Example

If you buy a property for £280,000, the SDLT you owe is calculated as follows:

0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £30,000 = £1,500
Total SDLT = £4,000

From April 1st 2016, if you are purchasing a property that you will be renting out, often known as a 'Buy to Let' property, Stamp Duty will be calculated at 3% over the standard rates. This rate will also apply to the purchase of 'second homes', and any purchase where an individual owns two or more properties at the end of the transaction and has not replaced their main residence. Read our additional residential property Stamp Duty guide for more information.

Stamp Duty is also payable when you purchase the freehold (buying the existing ‘assigned’ lease) for a property from your landlord, and is calculated on the same scale as for a property purchase. The purchase price of the lease is known as the ‘lease premium'.

Similarly, if you purchase a new residential leasehold property you will also pay the lease premium, but in addition if the total rent over the life of the lease (known as the ‘net present value’) is more than £125,000, you will also pay additional Stamp Duty of 1% on the amount over £125,000.

Special Rates

There are different Stamp Duty rates, rules and calculations for:

  • commercial properties
  • corporate bodies
  • people buying 6 or more residential properties in one transaction
  • shared ownership properties
  • multiple purchases or transfers between the same buyer and seller (also know as linked purchases)

Further details can be found in the Stamp Duty Land Tax section of the gov.uk website.

When does Stamp Duty have to be paid?

Stamp Duty is paid on or after the date on completion of a property purchase.

From the date of completion and assuming all the necessary contracts have been signed you have just 30 days in which to pay your stamp duty bill.

If you don't pay the stamp duty bill within this time frame you may be subject to a fine and incur interest on top of the existing amount.

Use our stamp duty calculator to find out how much stamp duty you will need to pay.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax is a tax that anyone buying a property a property above a certain threshold value will have to pay.

The amount you have to pay will be dependent on the value of the property you are purchasing.

Stamp Duty has to be paid in a lump sum and the values thresholds are set down by the government.

You can find out more about how stamp duty is calculated or calculate your stamp duty in the help and advice section of our website.