Stamp Duty Land Tax: A Complete Guide
In general, Stamp Duty is the tax that you pay when you buy a home (secondary or new build) in England or Northern Ireland, including London. We created this guide to help buyers navigate the Stamp Duty calculations and better understand their budgets.
Stamp Duty Tax Calculator: Key Points
- SDLT is the tax a buyer pays when they buy a property in England or Northern Ireland (Scotland and Wales have other tax systems).
- The tax value works out as a percentage of the home value you are buying, so higher prices mean bigger SDTL.
- Buyers have to pay SDLT within two weeks of the purchase completion date. After this point, ownership legally transfers to the new owner.
- We created the 1newhomes Stamp Duty Calculator to help current buyers navigate the challenging market and better understand their finance and affordability to prevent overstretching their budgets.
Stamp Duty Amount
Stamp Duty works out as a percentage of the property you buy. In other words, higher prices mean higher SDLT.
First-time property buyers. First-timers are tax-free on the first £425k of a property costing up to £625k. Previously, similar figures were £300k and £500k.
Existing buyers. Such buyers are tax-free on the first £250k of a home purchase. The previous level (until September 2022) was just £125k, meaning a double increase to the tax-free threshold.
Stamp Duty Base Rates
The government reworked the stamp duty bands in September 2022 and announced the changes to be permanent. This change removed 8 million properties from the SDLT, which is supposed to boost affordability.
Stamp Duty On Investment Purchase: Example
When buying a second home or a BTL property, there is a 3% surcharge on the total home value, on top of the standard SDLT. For instance, buying a second investment property worth £500k equates to £27,500 in SDLT:
- First £250k are tax-free.
- The next £250k fall under the 5% rate (£250,000 - £925,000 band), meaning £12,500 in Stamp Duty tax.
- Plus, the second home surcharge (3%), which means an additional £15,000 to pay.
The 3% surcharge applies even if you purchase another property as your main home before you have finished the sale of the existing one. However, you can have the money back if the sale completes within 36 months.
Below you will be able to use our calculator to calculate. You can also choose the right home for you with popular options:
houses for sale with swimming pool,
houses for sale with balcony,
houses for sale with gym,
houses for sale with roof terrace.
Stamp duty Tips From 1newhomes
Stamp duty Frequently Asked Questions
FAQ
Most property (and land) buying in England and Northern Ireland comes with a stamp duty tax. Buyers had to pay SDLT when:
- Buying a freehold property
- Buying a new or existing leasehold property
- Buying a property via Shared Ownership
- Exchanging payments for land or property (taking on a mortgage, buying a house share)
- Stamp Duty is paid within two weeks of the purchase completion date. After this point, the property ownership legally transfers to a new owner.
Using a handy Stamp Duty Calculator helps buyers avoid overstretching their budgets and make more reasonable decisions.
Yes, non-UK residents still have to pay normal Stamp Duty tax on their home purchase, whether new build or secondary real estate.
Plus, there is a 2% surcharge when the deal occurs in England and Northern Ireland.
The payment of stamp duty is required within 14 days of completion or entry date when purchasing a property in England. Completion or entry date refers to the time period when all contracts are signed; you receive the keys to the property. It is crucial to adhere to this timeline as any delay may result in penalties and potentially accrue interest.
There are certain transactions and situations where exemptions or relief from SDLT are applicable. For example, property transfers in a divorce, property left in a will, or when a freehold property is bought for less than £40,000.
Yes. There are different categories for stamp duty calculation, such as first-time buyers, buyers replacing their primary residence, and those purchasing properties in addition to their primary residence.
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