Stamp duty is a tax which is paid by the buyer to the government, and is the biggest single cost of moving home.
Until recently, you would have paid the same rate of Stamp Duty on the entire property transaction in the UK. So if you purchased a home at £250,000, you paid 1% on the whole transaction. If you purchased a home at £251,000; just £1 over the threshold, you paid 3% on the whole transaction.
Now, the amount of Stamp Duty you will pay in England increases on a sliding scale rather than in big jumps - like income tax.
The Scottish Government is also planning to introduce a new way to tax the purchase of homes in Scotland from April 2015. Find out more about Scotland's Land and Buildings Transaction Tax.
Under the new rules, you’ll pay new Stamp Duty Land Tax or Land and Buildings Transaction Tax rates on the part of the property price within each tax band. In England, that means you'll pay:
- nothing on the first £125,000 of the property price
- 2% on the next £125,000
- 5% on the next £675,000
- 10% on the next £575,000
- 12% on the rest (above £1.5 million)
For example, if you buy a property for £275,000, you’ll pay £3,750 of SDLT, as follows:
- £0 on the first £125,000
- £2,500 on the next £125,000
- £1,250 on the remaining £25,000
- Total = £3,750
Under the old rules, you would have paid 3% on the total purchase price - costing you £8,250. Find out more about Stamp Duty Land Tax or Land and Buildings Transaction Tax.