What is Stamp Duty?
Stamp Duty is the tax paid on purchasing a UK residential property. The tax is paid by the buyer. It is important you understand the tax rates before you embark on a property search as this can have a material effect on your budget.
What is the Stamp Duty Threshold?
As of March 2022, there is no Stamp Duty payable up to £125,000 in England and Northern Ireland. Further rates are charged on property values above £125,000.
What are the Stamp Duty Tax Rates?
The amount you pay depends on the purchase price of the property. The tax is progressive meaning that higher tax rates are charged on amounts above certain thresholds.
At March 2022, the UK SDLT rates on your primary residence are as follows:
0% up to £125,000
2% from £125,001 – £250,000
5% from £250,001 – £925,000
10% from £925,001 – £1.5 million
12% above £1.5 million
As the tax is a blended rate, it is helpful to use a Stamp Duty Calculator to arrive at your tax liability. A good calculator can be found here.
Can I Claim Back Stamp Duty?
There are some circumstances where you can reclaim Stamp Duty. For example if you buy a second home and subsequently sell your primary residence within 3 years you can reclaim the second home surcharge you paid on the second home.
Are there any Stamp Duty Reliefs or Exemptions?
There are a few reliefs and exemptions such as:
* First time buyers are exempt from SDLT on acquisitions up to £300,000. There is then a 5% incremental tax rate between £300,001 and £500,000. If the purchase price is over £500,000 then the full SDLT rate is applicable.
* Purchasing a property with an annex may qualify for Multiple Dwelling Relief (MDR). Here the average stamp duty rate is taken as though they were two properties and then applied to the overall purchase price. This can save you a considerable amount in Stamp Duty.
* If you buy 2-5 residential properties in a single transaction, MDR will also apply.
* Commercial stamp duty (top rate of 2%) also applies to farms and equestrian properties.
There are a few more reliefs but these are best discussed with a Stamp Duty tax expert who we can put you in touch with.
Do I pay Stamp Duty on a Second Home?
Yes. There is a 3% tax surcharge when you buy a second (or third, fourth etc) home. The surcharge applies to all of the bands above.
One trap to beware of is of you are selling your primary home but have not completed before your onward purchase, you will be liable for the second home surcharge. You can claim back the 3% surcharge paid within 36 months but you should be aware of this.
What Stamp Duty do non-UK residents pay?
A non-UK resident is defined as anyone who was not present in the UK for six months (183 days) out of the preceding 12-month period.
These buyers will pay a 2% surcharge and if the purchase is a second home or BTL this will be on top of the 3% second home/BTL surcharge.
What Stamp Duty do I pay on Commercial Property?
Stamp Duty rates for commercial property such as shops, offices and farms is different. The rate is:
0% up to £150,000
2% from £150,001 and upwards
This rate also applies to 6 or more residential properties when bought in one transaction. This can be helpful for residential investors.
Looking to Buy a Property?
Ludgrove is one of London’s best property agents and we work on your behalf to source, negotiate and secure your ideal home. We can refer you to a Stamp Duty expert and negotiate the best price so your purchase is a good investment after our fees and stamp duty has been applied.
Ludgrove is ranked as one of the UK's best property buying agencies by Spears, Prime Resi and E-Private Clients. We find properties for home-owners, investors, family offices and developers. Case studies of our work can be found here.
To discuss your property requirements feel free to contact us. We'd be delighted to hear from you:
+44 (0)207 889 2860 or
Email: info@ludgroveproperty.com