What is stamp duty in the UK?

When buying property in the UK, you'll need to pay a tax on your purchase. In England, this is called Stamp Duty Land Tax (SDLT), while Wales has its own system called Land Transaction Tax (LTT). Both are commonly referred to as "stamp duty."

This guide will explain how much you'll need to pay, when you need to pay it, and whether you might qualify for any tax relief - particularly if you're a first-time buyer. The rules and rates differ depending on whether you're buying in England or Wales, so we'll cover both regions separately.

In England, the tax is called Stamp Duty Land 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.

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”.

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.

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.

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.

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.

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.

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.