What is stamp duty? A factsheet

What is stamp duty? A factsheet
Stamp Duty Land Tax is a tax which must be paid when you purchase a property in England or Northern Ireland that is above a certain value. In Scotland, it is known as Land & Buildings Transaction tax, and in Wales as Land Transaction Tax.

Usually, the threshold at which you start paying Stamp Duty in England and Northern Ireland is £125,000 (or £300,000 if you’re a first-time buyer.) In Scotland, Land & Buildings Transaction Tax is normally payable on properties above £145,000, or £175,000 if you’re a first-time buyer, and in Wales, Land Transaction Tax usually applies to properties costing over £180,000. All these thresholds have now changed temporarily following the introduction of a stamp duty holiday in July 2020.

What is the stamp duty holiday?

The Chancellor Rishi Sunak announced on 8 July that the zero rate tax band for Stamp Duty Land Tax (SDLT) in England and Northern Ireland would increase to £500,000 until the end of March next year. This was followed by announcements from the Welsh and Scottish governments that they would also be introducing stamp duty holidays, again ending on 31 March next year. The aim of the holidays is to help buyers whose incomes might have been affected by coronavirus and also to kickstart the property market following the relaxation of lockdown measures.

If your purchase completes during the temporary Stamp Duty Land Tax holiday period, the following stamp duty rates will apply in England and Northern Ireland when purchasing a property.

Property valueStamp duty rateAdditional property eg: Buy to Let
Up to £500,000        Zero        3%
The next £425,000 (the portion from £500,001 to £925,000)         5%         8%
The next £575,000 (the portion from £925,001 to £1.5m)         10%         13%
The remaining amount (the portion above £1.5m)         12%         15%


The threshold at which Land Transaction Tax becomes payable in Wales has risen to £250,000, resulting in a maximum saving of £2,450 for someone buying a property costing this amount. Land Transaction Tax thresholds and rates for the stamp duty holiday period are shown below. The new rates will not apply to additional property purchases, for example, Buy to Let or second homes, where previous rates will still be used.

Property valueLTT rateAdditional property
Up to £180,000        0%        3%
The next £70,000 (the portion from £180,001 to £250,000)         0%         6.5%
The next £150,000 (the portion from £250,001 to £400,000)         5%         8%
The next £350,000 (the portion from £400,001 to £750,000)         7.5%         10.5%
The next £750,000 (the portion from £750,001 to £1.5m))         10%         13%
The remaining amount (the portion above £1.5m)         12%         15%


Scotland has increased the threshold at which homebuyers must pay Land and Buildings Transaction Tax to £250,000 as well. Someone buying a £250,000 property in Scotland, for example, would save a maximum £2,100 in stamp duty. Purchases of additional properties in Scotland are still subject to a 4% stamp duty surcharge.

The current rates in Scotland are shown below:

Property valueLBTT rateAdditional property
Up to £250,000        0%        4%
The next £75,000 (the portion from £250,001 to £325,000)         5%         9%
The next £425,000 (the portion from £325,001 to £750,000)         10%         14%
The remaining amount (the portion above £750,000)         12%         16%

When does the stamp duty holiday end?

The stamp duty holiday ends on 31st March 2021, so you must complete on your purchase before this date to benefit from it, regardless of where you’re buying in the UK.

If you’re worried about missing the deadline, make sure you do everything you can to get any documents your lender may need to see across quickly to avoid any delays. You should also respond to any conveyancing queries as soon as possible so that the process goes as smoothly and as speedily as possible.
If your purchase completes after the 31st of March 2021 then a higher level of Land Tax may apply to your transaction. L&C are not tax advisers and we recommend you take your own advice as to the level of Land Tax which may apply and ensure you have adequate resources to pay this if required.

What happens after this date?


Once the stamp duty holiday ends on 31st March, rates are expected to return to how they were previously.

That means any property purchases in England and Northern Ireland which complete from 1 April 2021 would pay Stamp Duty at the following rates:

Property valueStamp duty rateAdditional property
Up to £125,000        0%        3%
The next £125,000 (the portion from £125,001 to £250,000)         2%         5%
The next £675,000 (the portion from £250,001 to £925,000)         5%         8%
The next £575,000 (the portion from £925,001 to £1.5m)         10%         13%
The remaining amount (the portion above £1.5m)         12%         15%


If you’re a first time buyer who has never owned a residential property, you don’t have to pay stamp duty on the first £300,000 of the property value if you’re buying a home costing up to £500,000. You must pay 5% stamp duty on the portion between £300,001 and £500,000. From 1st April 2021, non-UK residents purchasing a residential property in England or Northern Ireland will need to pay an additional 2% in Stamp Duty Land Tax above the rate that applies to UK residents.

If you’re buying a property in Scotland, normal rates of Land and Buildings Transaction Tax at as follows:

Property valueLBTT rateAdditional property
Up to £145,000        0%        4%
The next £105,000 (the portion from £145,001 to £250,000)         2%         6%
The next £75,000 (the portion from £250,001 to £325,000)         5%         9%
The next £425,000 (the portion from £325,001 to £750,000)         10%         14%
The remaining amount (the portion above £1.5)         12%         16%


The main residential Land Transaction Tax rates and bands in Wales are as follows:

Property valueLTT rateAdditional property
Up to £180,000        0%        3%
The next £70,000 (the portion from £180,001 to £250,000)         3.5%         6.5%
The next £150,000 (the portion from £250,001 to £400,000)         5%         8%
The next £350,000 (the portion from £400,001 to £750,000)         7.5%         10.5%
The next £750,000 (the portion from £750,001 to £1.5m)         10%         13%
The remaining amount (the portion above £1.5m)         12%         15%

.
If you’re buying a property and want to take advantage of the stamp duty holiday, make sure your purchase completes by 31 March at the very latest. Bear in mind that although a March deadline might seem far away, a purchase can easily take three months or more to complete, especially if you have a survey that throws up any issues. The impact of coronavirus is also slowing the purchasing process down, with lenders and surveyors having to deal with a backlog of mortgage applications and valuations following the relaxation of lockdown measures.

If you’re not sure out how much Stamp Duty you need to pay on your property purchase, our Stamp Duty calculator can crunch the numbers on your behalf.

If your purchase completes after the 31st of March 2021 then a higher level of Land Tax may apply to your transaction. L&C is not able to advise on tax matters and we recommend you take specialist advice on the stamp duty level which may be applicable to your circumstances.






Call our expert
advisers now
icon-contact
Call free from mobile or landline
Open 7 days a week until 8pm weekdays