What is Stamp Duty Land Tax (SDLT)?
It's essential to factor SDLT into your budget when looking to buy a home. So what is it and how much are you likely to have to pay?
What is Stamp Duty?
Stamp duty Land Tax (SDLT) is a tax imposed by the government when you purchase a property. This tax is calculated as a percentage of the property's value.
It's essential to factor SDLT into your budget when looking to buy a home.
⏩ If you're a first-time buyer, you won’t have to pay any SDLT on properties costing up to £425,000.
⏩ For those moving home, SDLT applies to property values exceeding £250,000.
⏩ Buy-to-let landlords and investors usually have to pay 3% on top of SDLT rates as this means they will own more than one property.
What will you pay?
🏠 Rates for a single property 🏠
You pay stamp duty at these rates if, after buying the property, it is the only residential property you own.
Properties up to £250,000 = SDLT of Zero
The next £675,000 (the portion from £250,001 to £925,000) = SDLT of 5%
The next £575,000 (the portion from £925,001 to £1.5 million) = SDLT of 10%
The remaining amount (the portion above £1.5 million) = SDLT of 12%
Example
In October 2022 you buy a house for £295,000. The SDLT you owe will be calculated as follows:
0% on the first £250,000 = £0
5% on the final £45,000 = £2,250
Total SDLT = £2,250
🏠 First time buyers 🏠
If you’re buying your first home you can claim a discount (relief). You do not need to pay SDLT up to a property value of £425,000, then 5% SDLT on the value between £425,001 to £625,000.
You’re eligible if you and anyone else you’re buying with are first-time buyers.
If the price is over £625,000, you cannot claim the relief and will need to follow the rules for people who’ve bought a home before.
Example
You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:
0% on the first £425,000 = £0
5% on the remaining £75,000 = £3,750
Total SDLT = £3,750
🏠🏠 Higher rates for additional properties 🏠🏠
Buy-to-let landlords and investors usually have to pay 3% on top of SDLT rates as this means they will own more than one property.
Other special rates can apply for different circumstance, i.e. if you are not a resident in the UK. We would therefore suggest visiting the government site and following their guidelines
If you need further advice, feel free to get in touch.
