Tax is payable when you purchase a property above a certain value. The amounts can be quite significant and you’ll have to factor this into your budget when considering how much deposit you need to buy a house. The actual name of the tax and the rates applied depend on where you’re buying in the UK, whether you’re a first time buyer and, if not, how many properties you currently own.
The calculator and information below reflects the appropriate Land Tax to be paid if your purchase completes after 23rd September 2022. L&C is not able to advise on tax matters and we recommend you take specialist advice on the Land Tax level which may be applicable to your circumstances.
Published 28 September 2022
If you’re buying a property costing more than £250,000, you’ll usually need to pay Stamp Duty Land Tax (SDLT) on your purchase.
If you’re buying your first home, you’ll pay no stamp duty up to £425,000, and can claim Stamp Duty Relief on properties up to £625,000.
Here, we explain exactly how the stamp duty system works, so you can work out how much you’ll need to pay.
Stamp duty is a tax which homebuyers, with the exception of most first time buyers, must pay when purchasing a property costing over the stamp duty threshold, which is currently £250,000. It is payable whether you are buying a freehold or leasehold property.
The amount you pay is a percentage of the purchase price which will depend on the value of the property.
Stamp duty can add up to a considerable amount, so it’s important to budget for this in advance.
You can use L&C’s stamp duty calculator to work out how much you can expect to pay. Simply enter the purchase price of your property and the calculator will do the rest.
If you’re a first time buyer who has never owned a residential property, you don’t have to pay stamp duty on the first £425,000 of the property value if you’re buying a home costing up to £625,000. You must pay 5% stamp duty on the portion between £425,001 and £625,000. That means the stamp duty threshold for first time buyers is as follows:
Standard stamp duty rates apply to first time buyers purchasing properties costing more than £625,000. For joint applications, both parties must be first time buyers – if either has owned property before, the standard stamp duty rates will apply.
These changes were announced on 23rd September 2022 and came into immediate effect.
If you’re buying a property in Scotland, you'll pay Land and Buildings Transaction Tax (LBTT) rather than stamp duty. LBTT rates are shown below. First time buyers in Scotland benefit from relief through an increased nil rate band of LBTT up to £175,000.
If you’re buying a property in Wales, under the Welsh government’s Land Transaction Tax (LTT), which replaced stamp duty in April 2018, there is no LTT to pay for all buyers purchasing homes costing up to £225,000. This came into effect on 10th October 2022.
The following table shows the main residential LTT rates and bands in Wales, as of 10th October 2022.
If you already own a home and are buying another property, either to rent out, use as a holiday home, or for any other purpose, you’ll usually have to pay a surcharge. This will vary depending on where the property is, with England and NI charging an additional 3% and Wales and Scotland applying an additional 4% on top of the normal stamp duty rates. This surcharge will also apply even if the main home you currently own is overseas.
If you purchase a house for your child, and are named on the deeds of the property, whilst already owning a property, the surcharge will be payable.
If you already have a buy to let property, and are selling your main residence and buying a new main residence for you to live in, you will not have to pay the surcharge.
If you complete on your new property while still owning your old home you will have to pay the surcharge. However, if you sell your old home within 36 months you can reclaim the extra tax.
Stamp duty is payable on the price you pay for your new build property. Stamp duty is payable on fixtures and fittings which are considered to be attached to the building, such as fitted wardrobes or a kitchen. However, stamp duty is not payable on removable fixtures and chattels such as carpets and curtains. Some builders may give you an incentive payment to help cover the cost of your stamp duty.
If you are purchasing a percentage of a shared ownership property, you can opt to pay stamp duty on just the share you are purchasing, or if you are likely to purchase additional shares you can opt to pay stamp duty on the full purchase price. Please refer to the government website for full information.
You have 14 days from the date of completion to pay your stamp duty.
The date of completion is the day all the contracts have been signed and dated – and usually the day when you get the keys to your new home. In most cases, your solicitor or conveyancer will take care of paying the stamp duty on your behalf and they should confirm this for you. If you take longer than 14 days, you could be subject to a fine and you may even have to pay interest on top.
Many first time buyers no longer have to pay stamp duty, but there are a few other types of property transaction where you don’t have to pay stamp duty. These include:
You can find more about stamp duty exemptions on the Gov.uk website.
Stamp duty is just one of the additional costs you’ll need to pay when you buy a house. To find out more about the other additional costs, read L&C's guide to the cost of buying a house.
(Rates shown correct at the time of writing – September 2022)
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