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Stamp Duty Guide

Stamp Duty, or Stamp Duty Land Tax as it applies to the purchase of property, is a form of tax involved in the home-buying process.

Stamp Duty is applied when a consumer buys either property or certain shares.

Stamp Duty Land Tax is paid when property is bought. Stamp Duty or Stamp Duty Reserve Tax applies in the case of shares. All property above a set price attracts Stamp Duty Land Tax, be it a house, barn, flat or any other building or land.

As of 25th March 2010, the chancellor scrapped stamp duty on all homes costing £250,000 or less for first-time buyers only. The new stamp duty threshold will last for the next 2 years, and means that 9 out of every 10 first-time buyers will not have to pay stamp duty. The move should give first-time buyers a boost to get onto the property ladder. However, the tax break will be funded by an increase to 5% stamp duty on all houses costing £1 million or more.

For some consumers at the bottom of the market, stamp duty land tax may not even apply, but for the majority of house transactions some level of stamp duty land tax will be levied.

Currently, if the purchase price of a property falls below £125,000, the buyer does not have to pay Stamp Duty.

However, if the price of the property exceeds £125,000 the buyer has to pay between one and four per cent of the total purchase price to satisfy Stamp Duty Land Tax.

Stamp Duty varies for properties under shared ownership. Please see our guide to Shared Ownership Stamp Duty for more information on this topic.

Stamp Duty rates

Stamp Duty rates for residential property are set out below:

Property Purchase Price	Stamp Duty Land Tax Rate
Up to £125,000	0%
£125,000 - £250,000	1%
£250,001-£500,000	3%
£500,001 and above	4%
As of 25 March 2010, exceptions apply:
Up to £250,000 (FTB only)	0%
As of 2011/2012 tax year:
£1,000,000+	5%

 

Are there exceptions to Stamp Duty?

Generally, there are no exceptions to Stamp Duty Land Tax. However, for those people that purchase a property in an area designated by the government as being ‘disadvantaged,’ the limit of 0% stamp duty climbs to £150,000. For this reason, property bought in these areas that costs less than £150,000 does not attract any stamp duty.

A further exception to the Stamp Duty Land Tax rules applies to ‘zero carbon’ homes. This requires the house to fulfil a complex set of regulations, including renewable power, high quality insulation and other criteria. Some zero carbon homes qualify as exempt from Stamp Duty Land Tax. Those under £500,000 and zero carbon attract no stamp duty, those above £500,000 have their bill reduced by £15,000.

Who pays for Stamp Duty Land Tax?

The buyer of the property is responsible for paying stamp duty land tax. This is usually handled by a conveyancer or solicitor on behalf of a client.

Stamp Duty news

• Stamp duty tax affects more properties than ever, mortgage study reveals
• Mortgage costs cause stamp duty rise, figures show
• Mortgage lender calls for action over stamp duty
• First-time buyers still paying stamp duty
• First-time buyers face stamp duty woes, mortgage company warns
• More first-time buyers paying stamp duty, figures show
• Liberate first-time buyers from stamp duty, mortgage lender says
• Mortgage lender calls for stamp duty exemption
• Stamp duty changes fail first time buyers, mortgage holders told
• More Londoners paying stamp duty on mortgages, study shows
• Stamp duty a hindrance for first-time buyers, expert claims
• South East mortgage hunters unaffected by stamp duty changes