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What is stamp duty in the UK?

Just like you pay VAT on goods and services, you also pay tax on buying property. It isn’t actually called stamp duty any more. The word “duty” is another term for “tax”, so a stamp duty is a tax paid on certain legal documents. The document is physically stamped when the tax is paid, hence the name. Stamp duty still exists for things like share sales.

What you pay now on properties is actually a transfer tax on land transactions. It’s a devolved tax, which means that the governments of Scotland and Wales set their own rates and have their own revenue authorities that the tax is paid to. At Eden, we only deal with properties in England and Wales, so we’ll go into more detail on each of those.

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How much is stamp duty in England?

In England, the tax is called Stamp Duty Land Transaction Tax (SDLT), which doesn’t help with the confusion between this and Stamp Duty.

It is paid to Her Majesty’s Revenue and Customs (HMRC).

For residential house purchases, the current rates are displayed to the right.

Please note that the higher rates apply in various circumstances. The most common of which is if you own several properties and don’t intend to live in the property you are buying as your main residence.

Stamp Duty Table

Tax relief for first-time buyers in England

First-time buyers can claim a relief if they purchase their first home. This means they will
pay:

  • 0% on purchases up to £300,000
  • 5% on the portion between £300,001 and £500,000
  • For purchases above £500.000, the same rules apply as for those who have
    purchased a home before.

The government defines first-time buyers as “an individual or individuals who have never
owned an interest in a residential property in the United Kingdom or anywhere else in the
world and who intends to occupy the property as their main residence”.

Stamp duty land tax for a married couple or civil partnership in England

The rules about owning other property and being a first-time buyer apply to both you and
their spouse. In other words, you are treated as if you are buying the property together, even
if you are not.

If any of you individually have to pay the higher rates, you must pay the higher rates for the
transaction as a whole.

If your spouse has owned, or currently owns a property, then you can’t be a first-time buyer.

How much is stamp duty in Wales?

In Wales the tax is called Land Transaction Tax (LTT) and it is paid to the Welsh Revenue Authority (WRA).

For residential house purchases, the rates are to the right.

Please note that the higher rates apply in various circumstances. The most common of which is if you own several other properties and don’t intend to live in the property you are buying as your main residence.

Wales Stamp Duty (1)

Land transaction tax relief for first-time buyers in Wales

Unlike in England, there is no first-time buyers relief in Wales. Meaning all buyers must pay
LTT where the purchase price is above the nil rate band of £180,000.00 or the higher rates apply.

 

Land transaction tax for marriage or civil partnership in Wales

The same rules apply as in England for second properties, you are treated as if you are
buying the property together, even if you are not.

If any of you individually have to pay the higher rates, you must pay the higher rates for the
transaction as a whole.

Reliefs on stamp duty land transaction tax in the UK

In both England and Wales, there are various reliefs available, which change the amount of
tax you pay. For example, if you are buying multiple properties, different rates can apply if
you are buying through a company and not in your own name. You might also be able to
claim back any higher rate tax you’ve paid in the past in some circumstances. An expert at
Cornerstone Tax Advisors said:

“SDLT is the most complex, least understood tax which exists in the UK today, and it’s
about time it was recognised as such. When you have a leak, you call a plumber. When you
are dealing with tax, it’s always best to consult a tax advisor.”

Nobody wants to pay too much tax, so at Eden, we use a tax specialist on each transaction
to make sure you are paying the correct amount of tax every time.

 

When do I pay stamp duty?

Your conveyancer will ask you to pay the tax you owe to them and when you complete your
transaction they will submit a form and pay the tax to either HMRC or the WRA.

We are here to answer any questions you might have about tax on property purchase. Ask
for a quote, and find out everything you need to know about stamp duty land transaction tax
in England or Land transaction tax in Wales.

Learn more about our service and browse the range of help and advice articles available to
help you with buying a house in the UK.