For many people, stamp duty represents the biggest chunk of money spent when buying a new home after their deposit. But what is it and how is it calculated?
Stamp Duty Land Tax to give its full name, is paid when you buy a property over £125,000. It is charged on all houses, flats, land and other buildings. The rate of SDLT depends on two things, if the property is residential and the purchase price of the property. SDLT may also be due if you lease a property.
Before 4th December 2014, SDLT was charged at a single rate for the complete price of the property. From this date it was changed and is now charged at increasing rates for each portion of the price.
The following table shows how much you’ll pay depending on the value of your new property.
|Nothing on the first||£125,000|
|2% up to||£250,000|
|5% up to||£925,000|
|10% up to||£1.5m|
The government’s website has a handy calculator to help you work out the amount you’ll pay in order to help you budget and plan your finances.
For example, if you buy a property for £275,000, you’ll need to pay £3,750 SDLT. This is calculated -
- Nothing on the first £125,000
- £2,500 on the next £125,000
- £1,250 on the remaining £25,000