How do I calculate stamp duty and what is it?


HOUSEHUNTERS in England and Northern Ireland looking to buy a home usually pay stamp duty on properties over £125,000.

But it’s £500,000 right now thanks to a stamp duty holiday – so what is stamp duty and how is it calculated?

Stamp duty is a tax on property paid by most homebuyers

We run-down the rules for stamp duty in England and Northern Ireland, as rates differ for those buying homes in Scotland and Wales.

What is stamp duty?

Stamp duty land tax (SDLT) is a lump sum payment most people have to pay when buying a property or land.

How much buyers have to fork out varies depending on the price and type of property.

For example, first-time buyers are exempt from paying stamp duty on the first £300,000 on properties worth up to £500,000.

Rates are also different if it’s a second home or buy-to-let property, with an additional 3% on top of standard stamp duty rates.

Stamp duty will also be higher from April 2021 for overseas property buyers.

A stamp duty holiday was introduced because of the coronavirus pandemic to get the property market moving again.

It means there is no stamp duty for properties up to £500,000 until March 31, 2021.

The chancellor Rishi Sunak has been urged to extend this holiday as it nears the end.

Stamp duty land tax is a lump sum payment most people buying a property or land over a certain price in England or Northern Ireland have to pay

Do first time buyers have to pay stamp duty?

A first-time buyer is defined as an individual who has never owned an interest in a residential property in the UK.

Anyone buying a property under £500,000 does not need to pay stamp duty thanks to the stamp duty holiday.

After the holiday ends, first-time buyers paying £300,000 or less for a residential property do not have to pay stamp duty.

But first-time buyers paying between £300,000 and £500,000 will have to pay 5% of the purchase price between these thresholds.

First-time buyers purchasing homes over £500,000 don’t qualify for any relief.

How do you calculate the rate for your property?

Anyone buying a property under £500,000 does not need to pay stamp duty thanks to the stamp duty holiday.

After the holiday ends, the usual rates for residential properties are:

  • As announced in the 2017 Budget, first-time buyers will pay nothing on properties below £300,000, and they’ll pay 5% on the proportion of the property costing between £300,000 and £500,000
  • For everyone else, you pay nothing if the property costs below £125,000
  • You pay 2% if it is worth between £125,001 and £250,000
  • You pay 5% if between £250,001 and up to £925,000
  • You pay 10% if it is between £925,001 and £1.5million
  • You pay 12% on anything over £1.5million

For second homes or buy-to-let properties you pay, there is a 3% surcharge on top of this. This means you pay:

  • 3% on purchases up to £125,000
  • 5% on purchases between £125,001 and £250,000
  • 8% on purchases above £250,001 and £925,000
  • 13%on purchases above £925,001 and £1.5million
  • 15% on purchases above £1.5million

The government provides a handy calculator so you can work out how much you would pay on a property.

Will the stamp duty holiday be extended?

The stamp duty holiday was unveiled as part of the Chancellor Rishi Sunak’s “mini-Budget” in July 2020.

The move came at a time when property prices fell for the first time in eight years due to the pandemic.

The stamp duty holiday is due to expire on March 31, 2021.

At the moment, it is unclear whether it will be extended beyond this deadline.

There has been growing calls to extend the tax break amid the continued economic uncertainty caused by Covid.

We’re keeping track of whether the stamp duty holiday is being extended here and you can follow it for regular updates.


How has stamp duty affected the housing market?

It has been claimed that the current stamp duty system encourages people not to move due to the high associated costs.

This is having a particularly negative impact on second-steppers looking to buy family homes, as they’re finding older generations aren’t downsizing.

But at the other end of the scale, it’s thought younger buyers are also put off purchasing larger homes as they can’t afford the stamp duty costs.

Some ministers have called for stamp duty to be reformed, while think tanks have advocated for it being scrapped altogether.


Please enter your comment!
Please enter your name here