Use our stamp duty calculator to work out how much stamp duty you will have to pay when buying a new property. Stamp duty is calculated on a stepped basis on house purchases bought for more than £125,000. However, recent changes to rules now mean that first-time buyers in England, Wales and Northern Ireland are exempt from stamp duty on purchases under £300,000.
What is stamp duty?
Stamp Duty Land Tax (SDLT), usually just referred to as stamp duty, is a transaction tax on property purchases. The amount of tax payable is based on the actual purchase price (formally called the “chargeable consideration”) rather than the market value of the property.
At the time of writing, stamp duty is currently payable in England, Wales and Northern Ireland. A different type of tax, Land and Buildings Transaction Tax (LBTT) applies to property purchases in Scotland, and from 1 April 2018 a similar devolved tax, Land Transaction Tax (LTT) will apply in Wales.
Stamp duty changes
Over the years, successive governments have made various changes to stamp duty, usually as measures to stimulate or dampen certain parts of the property market. For example, from April 2016 the government introduced a 3% surcharge on purchases over £40,000 where the property was a second home. Although this affected people buying holiday homes, the measure was primarily intended to supress the purchase of second and subsequent properties as buy-to-let investments.
More recently, the government’s 2017 Autumn Budget announced the abolition of stamp duty for first-time buyers on homes purchased for up to £300,000, with reduced liability on purchases between £300,000 and £500,000. The move took effect from 22 November 2017, and was designed to allow more young people to buy their first property by directly reducing the costs and making purchasing a starter home more affordable.
The government has estimated that the this change to stamp duty will help up to 95% of first-time buyers in England, Wales and Northern Ireland, and the Office of Budgetary Responsibility (OBR) says the change is likely to result in an additional 3,500 first-time buyers per year. Depending on the property purchase price, first-time buyers could save up to £5,000 on the price of buying their first home. First-time buyers purchasing property for more than £500,000 are not entitled to any relief and will pay stamp duty at the normal rates.
How is stamp duty calculated?
Stamp duty on residential property purchases is charged on stepped rates according to the purchase price. The table below shows the basic stamp duty rates that apply to each segment of the overall purchase price for home movers, those buying a second (or subsequent) property, and first-time buyers purchasing a property for over £500,000.
|Band||Normal rate||Second property|
|Up to £125,000||0%||3%|
|£125,000 to £250,000||2%||5%|
|£250,000 to £925,000||5%||8%|
|£925,000 to £1.5 million||10%||13%|
|Over £1.5 million||12%||15%|
For example, a home mover buying a property for £300,000 would pay:
Nothing on the first £125,000: £125,000 x 0% = £0
Plus 2% on the amount between £125,000 and £250,000 £125,000 x 2% = £2,500
Plus 5% on the remaining amount above £250,000: £50,000 x 5% = £2,500
Total stamp duty payable: = £5,000
The next table summarises the changes to stamp duty for first-time buyer purchases up to £500,000 from 22 November 2017.
|Band||Normal rate||New rate for first-time buyers|
|Up to £125,000||0%||0%|
|£125,000 to £250,000||2%||0%|
|£250,000 to £300,000||5%||0%|
|£300,000 to £500,00||5%||5%|
Contact Just Mortgage Brokers today
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