Stamp duty FAQ’s
Have you got any questions about stamp duty? Here are insights and advice from our team of mortgage brokers on frequently asked questions.
What is stamp duty?
Stamp Duty (a tax on legal documents that had to be “stamped” at the Government stamp office) has been around in various guises since 1694. Stamp duty on transactions in land was reformed in 2003 so that it is technically no longer a tax on the legal documents, but a form of self-assessed transfer tax charged on "land transactions" – and it was re-branded as Stamp Duty Land Tax. This is now a tax that is imposed on the purchase of property or land above a certain value threshold.
Like all tax rates and legislation, stamp duty has changed over the years. Rates of tax charged on high value properties have increased dramatically since 2000 with a maximum (unsurcharged) rate of 12% – and this has been offset by periodic short term reductions designed to stimulate the property market at times of economic shock.
In response to the COVID-19 crisis, property buyers in England and Northern Ireland received a “holiday” from stamp duty on the first £500,000 of each transaction from 8 July 2020 to the end of June 2021. From 1 July 2021 – the stamp duty free limit was reduced to £250,000.
From 1 October 2021, rates reverted to pre-2020 requirements with stamp duty in England and Northern Ireland starting at 2% on the value in excess of £125,000. It is important to note that England and Northern Ireland, Wales, and Scotland each have their own separate tax applicable to residential property purchases with slightly different rates and special discounts.
Please note that the following is based on purchases by UK residents and that additional costs may apply for non-UK residents. If you are a BTL purchaser and not a first-time buyer, it is important to note that buy to let stamp duty is also higher for additional homes.
What are the rates of stamp duty?
The four countries making up the United Kingdom have different legislation supporting the taxes and different rates of stamp duty.
England and Northern Ireland
imposes a Stamp Duty Land Tax (SDLT)
Scotland
imposes a Land and Buildings Transactions Tax (LBTT)
Wales
imposes a Land Transaction Tax (LTT)
Please note - The following information is to be used as a guide only.
England and Northern Ireland - Stamp Duty Land Tax
England and Northern Ireland SDLT Rates
The basic rates of SDLT applicable to the value of the property are as follows:
| Property or lease premium or transfer value |
SDLT Rate |
| The portion up to and including £125,000 |
0% |
| The portion over £125,000 up to and including £250,000 |
2% |
| The portion over £250,000 up to and including £925,000 |
5% |
| The portion over £925,000 up to and including £1,500,000 |
10% |
| The portion over £1,500,000 |
12% |
As a first-time home buyer you will be eligible for a lower rate of SDLT if you are spending less than £500,000 on the property. In that case the SDLT rate is nil on the first £300,000 and 5% between £300,001 and £500,000. If you are spending over £500,000 the entire “discount” is lost and the full rates above are payable.
For example, if you are a UK resident and sole first-time purchaser of a freehold residential property for £290,000 in England after 1 October 2021, you will pay no stamp duty. However, if the property is worth, say, £400,000, you will have to pay the 3% stamp duty on the additional £100,000, which is £3,000. There is an SDLT surcharge on the purchase of second homes (including buy to let properties and all purchases of residential property by limited companies) of 3% on the entire transfer value. Furthermore, since 1st April 2021, an additional 2% Stamp Duty surcharge was introduced for overseas buyers on the purchase of residential property in England and Northern Ireland.
Scotland - Land and Buildings Transaction Tax
Land and Buildings Transaction Tax (LBTT) Rates
In Scotland, you will be liable for Land and Buildings Transaction Tax rather than SDLT. The basic rates of LBTT applicable to the value of the property are as follows:
| Purchase price |
LBTT Rate |
| The portion up to and including £145,000 |
0% |
| The portion over £145,000 up to and including £250,000 |
2% |
| The portion over £250,000 up to and including £325,000 |
5% |
| The portion over £325,000 up to and including £750,000 |
10% |
| The portion over £750,000 |
12% |
For example, if you are a UK resident and sole purchaser of a freehold residential property for £145,000 in Scotland that will be transferred into your name after the 1st October 2021, you will pay no land transaction tax. However, on a property purchased for £300,000, you will be liable for £4,400 in Land and Buildings Transaction Tax. There is a first-time buyer reduction in LBTT increasing the nil rate band to £175,000.
For second home buyers and BTL property buyers, Scotland also implements an Additional Dwelling Supplement (ADS), similar to the SDLT surcharge in England, which is charged at 4% of the total purchase price of the property.
Wales - Land Transaction Tax
Land Transaction Tax (LTT) Rates
In Wales, you pay Land Transaction Tax rather than SDLT. The basic rates of LTT applicable to the value of the property are as follows:
| Purchase price |
LBTT Rate |
| The portion up to and including £180,000 |
0% |
| The portion over £180,000 up to and including £250,000 |
3.5% |
| The portion over £250,000 up to and including £400,000 |
5% |
| The portion over £400,000 up to and including £750,000 |
7.5% |
| The portion over £750,000 up to and including £1,500,000 |
10% |
| The portion over £1,500,000 |
12% |
For example, if you are a UK resident and sole purchaser of a freehold residential property for £160,000 in Wales that will be transferred into your name after the 1st of October 2021, you will pay no Land Transaction Tax. However, on a property purchased for £300,000, you will be liable for £4,950 in Land Transaction Tax.
Surcharges on Buy to Let and Second Home Purchases
For second home buyers and BTL property buyers, Wales also implements a surcharge similar to the SDLT surcharge in England, which is charged at 4% of the total purchase price of the property. There are no special discounted rates of LTT for first time home buyers in Wales.
When must stamp duty be paid?
All residential property buyers need to note that you currently have a maximum of 14 days to file your SDLT return in England and Northern Ireland and to pay the tax that is due. In Wales and Scotland this deadline is 30 days for their equivalent taxes. In most cases the filing of these returns will be handled by solicitors responsible for the purchase transaction.
How to pay stamp duty
While it is your legal responsibility to settle your stamp duty, the solicitor managing the transfer of your property will most likely sort out the details and give you payment instructions well within the required 14 days in which you have to pay. If you are unsure about this, please don’t hesitate to contact your mortgage broker for advice.
You can also pay using the following method:
- Visit the HM Revenue & Customs website- Submit your return to register the transaction. You may also be able to visit them in person.
- Find your unique transaction reference number – This is an 11-character number on your submission receipt (online) or paper stamp duty return.
Make the payment to HM Revenue & Customs – Keep in mind that bank transfers may take up to 3 working days to reflect, so be sure to pay with this in mind. You can also use faster payment methods, including CHAPS payments. It should be noted that you cannot use a credit card to pay stamp duty.
How to pay land transaction tax in Scotland and Wales
Scotland
Your solicitor can handle this process for you, or you can pay using the following method:
- Visit the Revenue Scotland website - Submit your return to register the transaction. You may also be able to visit them in person.
- Find transaction reference – This is a 13-character number on your online return, beginning with ‘RS’.
Make the payment to Revenue Scotland - Keep in mind that bank transfers may take up to 3 working days to reflect, so be sure to pay with this in mind. You can also use faster payment methods, including CHAPS payments. It should be noted that you cannot use a credit card to pay stamp duty.
Wales
Your solicitor can handle this process for you, or you can pay using the following method:
- Visit the Welsh Revenue Authority website – Submit your return to register the transaction. You may also be able to visit them in person.
- Find your unique transaction reference number – This is a 12-character number on your online return, beginning with ‘RS’. You can also use the following reference on your payment if needed – the postcode of your property and the surname of the buyer. For example, SA52/Smith.
Make the payment to the Welsh Revenue Authority- Keep in mind that bank transfers may take up to 3 working days to reflect, so be sure to pay with this in mind. You can also use faster payment methods, including CHAPS payments. It should be noted that you cannot use a credit card to pay stamp duty.
Do you have questions about stamp duty or our STLD calculator?
If you have any questions about our residential stamp duty calculator or want to speak to a mortgage broker about buying a residential property or BTL investment, our team is ready to assist you. With over 20 years of experience and access to the widest range of lenders, we’re here to help you make your property ownership dreams a reality.
What are “Enveloped” buildings and how does this affect SDLT?
In 2012 measures were introduced to ensure that taxes could be levied on (high value) residential properties owned by non-resident “non-natural persons” (i.e. companies and partnerships). The two measures introduced were
- a flat rate of SDLT (now 15%) on the entire value of the transaction, and
- an annual tax on enveloped dwellings (ATED) that on a property worth say £3 million would currently be £25,300.
These measures were not designed to attack the buy to let market so there are exemptions for (amongst other things) property development and property rental businesses.
