Understanding Stamp Duty Land Tax

Did you know that 80% of first-time buyers don't need to pay Stamp Duty? Here’s our guide to Stamp Duty Land Tax.

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When you buy a home in England, Wales and Scotland, the Government usually charges a tax called Stamp Duty Land Tax (SDLT). The amount you pay is dependent on the value of the property you purchase and whether you are a first-time buyer or not.

This guide explains how much Stamp Duty you will pay on your property. For purchases in Scotland, take a look at our guide to the Land and Buildings Transaction Tax in Scotland.

Stamp Duty for first-time buyers!

As a first-time buyer, you can benefit from stamp duty land tax relief on homes worth less than £500,000. That’s a saving of around £1,660 for an average first-time buyer

For first time buyers purchasing a home worth up to £300,000 there is no stamp duty, and for homes worth between £300,000-500,000, you won’t pay stamp duty on the first £300,000, which means total Stamp Duty will be reduced by £5,000.

The table below shows how much Stamp Duty you will need to pay as a first-time buyer.

House purchase price Stamp duty
£300,000 and under 0%
£300,001-£500,000 5% after the first £300,000
Above £500,000 Standard Stamp Duty rates apply

That means in total, 95% of first-time buyers who pay stamp duty benefit from Stamp Duty relief, including almost 80% in London.

For full eligibility details, take a look at this guidance from HM Treasury.

I’ve bought a home before, how much will I pay?

The amount of Stamp Duty you pay increases on a sliding scale dependent on the value of the property you purchase - like income tax.

That means you’ll pay stamp duty rates on the part of the property price within each tax band, as follows:

Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

For more details on the recent changes to Stamp Duty, take a look at this HM Treasury Guidance.

Does Stamp Duty apply in Scotland and Wales?

Stamp duty is devolved in Scotland and it applies in Wales until April 2018, when it is devolved and the Welsh Government’s new Land Transaction Tax is introduced. Welsh First Time Buyers will benefit from this stamp duty relief until then. It will be for the Welsh Government to make any decisions about introducing future reliefs in Land Transaction Tax.

How do I know if I am eligible for the First Time Buyer relief?

The definition of a first-time buyer for this relief is someone who has never owned freehold or leasehold interest in a dwelling before and who is purchasing their only or main residence. Residential property anywhere in the world is counted when determining whether someone is a first-time buyer. Where there are joint purchasers, all purchasers would need to be first-time buyers.

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