2021 Update

What is Stamp Duty? (And How Much Is It?)

Matthew Cooper

Buying property is a pricey thing to do at the best of times, and having to pay Stamp Duty too certainly doesn't help! But what is Stamp Duty? And how much is it? When do you pay it, and how does it vary across the UK? Is there any way to avoid paying stamp duty? We've covered all that for you here in our handy guide. Read on for more.

What is Stamp Duty?What is Stamp Duty?

What is stamp duty?

Stamp duty land tax, aka SDLT, is payable if you buy a property or land over a certain purchase price inEngland and Northern Ireland.  In Wales you would pay ‘land transaction tax’ (LTT) and in Scotland it is known as ‘land and buildings transaction tax’ (LBTT).  

How much is stamp duty?

You will only have to pay SDLT on a property you have purchased if the property price reaches a certain threshold.  If the property price covers two or more thresholds, you will end up paying one rate on a certain portion of the price and a different rate on the remaining portion.  The rates of tax differ depending on where in the UK you are buying a property (though England and Northern Ireland rates are the same).

England and Northern Ireland

The government introduced a stamp duty holiday back in July 2020, meaning the threshold at which SDLT becomes payable temporarily increased in England and Wales from £125,000 to £500,000.

When does the stamp duty holiday end?

The tax break comes to an end on 30th June 2021 and the thresholds will gradually return to normal from 1st October 2021.

Current SDLT thresholds for residential properties in England & Northern Ireland

Property value

Rate on main residence  

Rate for second home  

Up to £250,000*

Zero

3%

Over £250,000 up to and including £925,000*

5%

8%

Over £925,000 up to and including £1.5 million

10%

13%

Over £1.5 million

12%

15%

* If you are a first-time buyer and qualify for first-time buyer’s relief, you will not pay stamp duty on property purchases up to £300,000 from July 2021.  Where you have paid over £300,000 but not more than £500,000 for your home, you will only pay SDLT at the rate of 5% on the remaining consideration not exceeding £500,000.

Thresholds for residential property purchases from 1 October 2021

Property value

Rate on main residence  

Rate for second home  

Up to £125,000*

Zero

3%

Over £125,000 up to and including £250,000*

2%

5%

Over £250,000 up to and including £925,000*

5%

8%

Over £925,000 up to and including £1.5 million

10%

13%

Over £1.5 million

12%

15%

*Thresholds and rates will be affected if first-time buyer’s relief is available.

Wales

Completions up to 30 June 2021

The Welsh LTT temporary holiday is still in force until 30th June 2021, so if you complete on a property purchase up to and including this date the following rates will apply to you:

Property value

Rate on main residence  

Rate for second home  

Up to and including £250,000

Zero

Up to and including £180,000 = 4%

Over £180,000 up to and including £250,000 = 7.5%

Over £250,000 up to and including £400,000

5%

9%

Over £400,000 up to and including £750,000

7.5%

11.5%

Over £750,000 up to and including £1.5 million

10%

14%

Over £1.5 million 

12%

16%

Completions on or after 1 July 2021

Property value

Rate on main residence  

Rate for second home  

Up to and including £180,000

Zero

4%

Over £180,000 up to and including £250,000

3.5%

7.5%

Over £250,000 up to and including £400,000

5%

9%

Over £400,000 up to and including £750,000

7.5%

11.5%

Over £750,000 up to and including £1.5 million

10%

14%

Over £1.5 million 

12%

16%

Scotland

Current rates

The Scottish Government did introduce a temporary LBTT holiday but this ended on 31 March 2021.  The current rates of LBTT are:

Property value

Rate on main residence  

Rate for second home  

Up to and including £145,000*

Zero

4%

Over £145,000 up to and including £250,000*

2%

6%

Over £250,000 up to and including £325,000

5%

9%

Over £325,000 up to and including £750,000

10%

14%

Over £750,000

12%

16%

* If you are a first-time buyer, you will not pay land and buildings transaction tax on the first £175,000 of consideration payable in respect of the property.

Calculating stamp duty

Example

Let’s look at how much stamp duty you would owe if you bought a home worth £400,000 in England on the following dates and you do not qualify for any reliefs:

Completion date - 1st June 2021

Completion date - 1st August 2021

Completion date - 1st November 2021

Zero 

Zero up to the first £250,000

5% on £250,001 - £400,000 = £7,500 

Zero up to £125,000 

2% on £125,001 - £250,000 = £2,500

5% on £250,001 - £400,000 = 

Total = £7,500

Total SDLT due = 0

Total SDLT due = £7,500 

Total SDLT due = £10,000 

If you need help working out how much tax you’ll pay, the government have created helpful calculators to do the hard work for you:

Stamp Duty on second homes

If you are buying a second home, buy-to-let property or a holiday home in England or Northern Ireland for more than £40,000, you will be charged an additional 3% on top of the standard SDLT rates.  In Scotland and Wales, it is a 4% surcharge on top of the usual LBTT and LTT rates respectively for any additional properties bought for £40,000 or more.

We have included the relevant multiple property rates in our tables above.  

Example

Let’s use our example from earlier but this time you are buying a second home (which will not be replacing your main residence) worth £400,000 in England on the following dates:

Completion date - 1st June 2021

Completion date - 1st August 2021

Completion date - 1stNovember 2021

3% on £400,000 = £12,000

3% on the first £250,000 = £7,500

8% on £250,001 - £400,000 = £12,000 

3% on the first £125,000 = £3,750

5% on £125,001 - £250,000 = £6,250

8% on £250,001 - £400,000 = 

Total = £12,000

Total SDLT due = £12,000

Total SDLT due = £19,500

Total SDLT due = £22,000

Stamp Duty Reliefs (How to avoid stamp duty within the law)

There are a number of reliefs from SDLT for residential properties.  We have listed a couple of examples of the reliefs available in England and Northern Ireland below.

First-time buyer’s relief (on acquisitions not exceeding £500,000)

Broadly, the conditions are:

  • You must be purchasing a ‘major interest’ (a freehold or leasehold interest) in a single residential dwelling
  • The purchase price must not exceed £500,000
  • The buyer (or each buyer) is a first-time buyer who intends to occupy the property as their sole/main residence
  • The transaction is not linked to another transaction
  • The supplemental 3% SDLT charge does not apply to the transaction

If you are eligible for first-time buyer’s relief, then from 1st July 2021 the following rates will apply:

Relevant consideration

SDLT rate

Up to and including £300,000

0%

Any remainder (as long as this does not exceed £500,000)

5%

Multiple dwellings relief

If you acquire more than one dwelling in the same or linked transactions, multiple dwellings relief operates by applying the rates of SDLT chargeable on each dwelling by reference to the mean consideration (which is the aggregate consideration divided by the number of dwellings).

Example

Let’s say John is buying two properties in England that will complete on 1st November 2021. One property is worth £250,000 and the other property is worth £500,000.

  1. Step 1: Calculate the mean consideration, which is £250,000 + £500,000 / 2 = £375,000.
  2. Step 2: Calculate the SDLT due on the mean consideration (remember the 3% surcharge will apply here as John is purchasing multiple properties) = £125,000 at 3% = £3,750, £125,001 - £250,000 at 5% = £6,250, and £250,001 - £375,000 at 8% = £10,000. Total = £20,000.
  3. Step 3: Multiply the SDLT due on the mean consideration by the number of properties, £20,000 x 2 = £40,000.

SDLT due without the multiple dwellings relief would be £50,000 (3% x £125,000 plus 5% x £125,000 plus 8% x £500,000), so you will have saved £10,000 in SDLT.

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