Stamp Duty - Everything you need to know
If you’re buying a home in England or Northern Ireland you will now pay a reduced rate of Stamp Duty Land Tax (SDLT) until 31 March 2021. You will pay no Stamp Duty if the amount you pay for your main home is under £500,000. If you’re purchasing additional properties you will still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band.
What is Stamp Duty?
Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England and Northern Ireland.
If you’re buying your main property up until 31 March 2021, you will not have to pay Stamp Duty on properties costing up to £500,000. This will apply whether you’re a first-time buyer or have previously owned a property.
Properties costing more than £500,000 will pay the Stamp Duty rate based on the value of the property over £500,000.
If you’re buying a second home, you’ll still pay Stamp Duty on a property costing more than £40,000 at the revised rates – paying an extra 3%.
This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.
How much is Stamp Duty?
There are several rate bands for Stamp Duty.
The tax is calculated on the part of the property purchase price falling within each band.
Until 31 March 2021, you’ll pay no Stamp Duty on the purchase of your main property costing up to £500,000. If the property you’re buying costs more than £500,000, you’ll pay Stamp Duty based on the revised rate bands, below.
For example, if you buy a house for £575,000, the Stamp Duty Land Tax you owe is calculated as follows:
0% on the first £500,000 = £0
5% on the final £75,000 = £3,750
Total SDLT = £3,750
This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8 July 2020.
Stamp Duty on second homes
If you’re buying an additional property, such as a second home or certain buy-to-let properties, you’ll still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band up until 31 March 2021.
This increased rate applies to properties bought for £40,000 or more.
It doesn’t apply to caravans, mobile homes or houseboats.
You must have completed your property purchase by 31 March 2021 to qualify for the new revised rates on Stamp Duty. Any purchases completed before the chancellor’s announcement on 8 July 2020 will continue to pay Stamp Duty rates valid at that time.
Repayment of higher rates of Stamp Duty
If you buy a new main residence but there’s a delay in selling your previous main residence, you’ll have to pay the higher Stamp Duty rates as you’ll now own two properties.
However, if you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.
You can request a refund for the amount above the normal Stamp Duty rates if:
you sell your previous main residence within three years, and
you claim the refund within three months of the sale of your previous main residence, or within 12 months of the filing date of your SDLT tax return, whichever comes later.
For an application form and more information, visit the GOV.UK website.
When do you have to pay Stamp Duty
You have 14 days to file a Stamp Duty Land Tax (SDLT) return and pay any SDLT due.
If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.
Find out more about Stamp Duty penalties and interest on the GOV.UK website.
How to pay Stamp Duty
Usually your solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself.
Either way, you’re responsible for making sure it’s all submitted on time.
If the price of your new home is under £500,000 you must still submit a return (unless exempt) even though you won’t need to pay any Stamp Duty.
Learn about filing a return and paying Stamp Duty on the GOV.UK website.
When is Stamp Duty not payable?
There are other circumstances in which Stamp Duty is either not payable or can be reduced:
Slightly over rate band. If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.
Transfer of property in separation or divorce. If you’re divorcing or separating from your spouse or partner, there’s no Stamp Duty to pay if you transfer a proportion of your home’s value to them. Read more in our guide Protecting your home ownership rights during divorce or dissolution.
Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your will – they won’t have to pay Stamp Duty on the market value of the property.
However, if you exchange properties with another person, you will each have to pay Stamp Duty on the property you receive based on its market value.
To find out more about transfer of deeds, go to the GOV.UK website.
Find out about other situations where Stamp Duty might not be payable on the GOV.UK websiteopens in new window.