If you buy property over a certain value anywhere in the UK, you are liable to pay Stamp Duty Land Tax (SDLT). Find out more below.
The amount of tax varies according to a number of factors: the price that the property has sold for; whether the property is for residential or commercial use; and whether it is freehold or leasehold.
Residential Use
For residential use, stamp duty becomes due on property bought for over £125,000. Above this amount, it rises in bands, starting at 1%.
(Properties deemed to be in disadvantaged areas previously had a higher starting threshold of £150,000, but this was abolished in April 2013.)
The Bands
|
Purchase Price |
Stamp Duty Percentage |
|
£0 - £125,000 |
0% |
|
£125,000 - £250,000 |
1% |
|
£250,000 - £500,000 |
3% |
|
£500,000 - £1,000,000 |
4% |
|
£1,000,000 - £2,000,000 |
5% |
|
£2,000,000+ |
7% |
|
£2,000,000+ [Bought by corporation] |
15% |
Once the property value falls into a band, the stamp duty rate applies to the whole value, not just the increment above the previous threshold.
So, while a property bought at £125,000 incurs no stamp duty, a property bought at £126,000 incurs a 1% charge on the whole amount (£1,260).
Need help crunching the figures? Use our Stamp Duty calculator here.
Adding to a Mortgage
It is possible to add the cost of stamp duty to your mortgage, but there are two main disadvantages to doing so.
- Firstly, the interest accrued on this additional amount over the lifespan of a mortgage is substantial.
- Secondly, it may affect the loan-to-value tier that you had planned for your mortgage. If you’re planning to apply for an 85% LTV mortgage, you might find that the extra lending required to cover the cost of stamp duty pushes you towards a more expensive 90% LTV mortgage instead.
Residential Lease
If the residential lease exceeds £125,000, you will pay 1% in Stamp Duty on amounts above the threshold.
Non-Residential / Mixed-Use Property
|
Purchase Price / Lease Premium |
Stamp Duty Percentage |
|
£0 - £150,000 [Rent < £1,000 p.a.] |
0% |
|
£0 - £150,000 [Rent > £1,000 p.a.] |
1% |
|
£150,000 - £250,000 |
1% |
|
£250,000 - £500,000 |
3% |
|
£500,000+ |
4% |
Non-Residential / Mixed-Use Leases
If the non-residential or mixed-use lease is for more than £150,000, you pay 1% Stamp Duty on the amount above the £150,000 threshold.
All of the information provided is for use as an overview only and should not be the basis for any mortgage decision.