At the start of the transaction we need you to assess how much stamp duty you will have to pay on completion of the purchase.
We will draft the tax return based on the information you give to us; therefore, it is your responsibility to give us the right information and we will not have any responsibility to check that the replies you give to us are correct.
What Rate Will You Pay?
The stamp duty rates are in three different categories: -
- Standard rate for home movers.
- Buy to let, second or holiday home rate (higher rate).
- First time buyer.
We will need you to tell us which category of transaction you fall into.
Standard Rate
Standard rate is payable when you buy a property you are planning to live in (and you have owned a property before). This rate applies if you will only own one property when you have completed the purchase of your new property i.e. you are replacing your main home.
The amount of tax is payable based upon the purchase price of the property and is charged as a percentage of the overall total across several different bands. The rates below illustrate the SDLT rates you will pay for house purchases completed on or after 1st April 2025:
|
Property Price
|
Stamp Duty Rate
|
|
Up to £125,000
|
Zero
|
|
Portion from £125,001 to £250,000
|
2%
|
|
Portion from £250,001 to £925,000
|
5%
|
|
Portion from £925,001 to £1.5 million
|
10%
|
|
Remaining amount above £1.5 Million
|
12%
|
To use a purchase price of £295,000 as an example, you would pay no tax at all on the first £125,000 of the purchase price, and then 2% on the portion up to £250,000 (£2500) and a further 5% on the final remaining amount up to £300,000 (£2250). This would come to an overall SDLT amount of £4,750.
Higher Rate
The Higher Rate of SDLT is charged on ‘second homes’. The most common example would be a Buy to Let/Investment property, but there are several other situations in which a property may be classed as ‘second home’. If anyone involved in the purchase is named on the deeds to another property, anywhere else in the world, then the higher rate of SDLT would apply.
The rules do make a concession, however, for those who own additional properties but wish to move house. If you own a buy to let for example, but plan on selling your current home and purchasing a new one, then the Standard Rate of SDLT applies as long as your previous main residence is sold within 36 months of completing your new purchase. The properties being bought and sold must both be intended as your ‘main residence’, where you personally live and spend the majority of your time, however, in order to qualify.
This is a very complex tax to apply in some circumstances. There are some examples set out below if you have any doubts you should raise them with your conveyancer.
Examples:
- You rent your home and own a buy to let property. You sell it and purchase another buy to let. At the end of the transaction, you only own one property so the standard rate applies.
- You are a buy to let investor with 10 residential properties and you own your own home. You decide to sell your home and purchase a new one. At the end of the day of the transaction you own 11 properties. However, as you will have replaced your main residence you pay the standard rate as long as your previous main residence is sold within 36 months of completing your new purchase.
- You own your own home as well as a buy to let property. You sell your buy to let property and purchase another. At the end of the day of the transaction you own two properties. A new property has not replaced your main residence so the higher rate applies.
The amount of tax is payable based on the purchase price of the property and is charged as a percentage of the overall total across several different bands. The rates below illustrate the SDLT rates you will pay for house purchases completed on or after 1st April 2025:
|
Property Price
|
Stamp Duty Rate
|
|
Up to £125,000
|
5%
|
|
Portion from £125,001 to £250,000
|
7%
|
|
Portion from £250,001 to £925,000
|
10%
|
|
Portion from £925,001 to £1.5 Million
|
15%
|
|
Remaining amount above £1.5 Million
|
17%
|
To use a purchase price of £300,000 as an example, you would pay 5% on the first £125,000 (£6250) of the purchase price, then 7% on the next £125,000 (£8750) and then 10% on the final remaining amount up to £300,000 (£5000). This would come to an overall SDLT amount of £20,000.
First Time Buyers
First Time Buyers benefit from a reduced rate of SDLT when purchasing their first property. To qualify for the lower rate, everyone involved in the purchase needs to be a first-time buyer – if any of you have owned a property before, then the standard rates of SDLT would apply.
To be defined as a first-time buyer;
- You must never have owned a property or a substantial interest in a property. (more than 25% ownership).
- You must not have inherited a property
- You cannot have owned a property abroad.
- You both must be first time buyers if buying jointly.
- You can own a commercial property.
Under the first-time buyer rate, you do not pay any tax at all on properties purchased up to £300,000, and then pay a reduced rate up to £500,000. If you purchase a property for more than £500,000 then you do not receive any first-time buyer relief and the Standard Rate of SDLT applies.
|
Property Price
|
Stamp Duty Rate
|
|
Up to £300,000
|
Zero
|
|
Portion from £300,001 to £500,000
|
5%
|
To use a purchase price of £400,000 as an example, you would pay no SDLT on the first £300,000 and then 5% on the remaining £100,000 (£5000).
Notes
Assuming that there is nothing unusual about the transaction and based on the information you give us, we will estimate the amount of SDLT payable on the transaction as accurately as we can.
We cannot advise on complex tax issues. If there are unusual circumstances or tax complications, then specialist advice will be needed before we take any steps in the transaction. We would advise that this is done at an early stage so that you know how much tax will be payable.
You pay tax on the “consideration” for the deal. This is normally the price stated in the transfer deed but it might also include the value of anything that you are paying for separately. It will also include any cash paid over direct and not recorded in the contract, or where you pay any of the seller’s fees or expenses or take over all or part of a debt or mortgage.
Similarly, the amount of tax paid might be less than the figure on the transfer where not all the amount is paid over because the seller offers a discount, or gifts part of the purchase price.
You must tell us if there is any other aspect of the deal not mentioned in the purchase documents, and whether there are other properties involved in the deal you have agreed with the seller.
Chain Complications:
If a conveyancing chain breaks down and you decide to buy your new home without selling your old home, you will as a result own two properties for a short time. If this happens, you would have to pay the higher rate on your new home and claim it back when you sell your old home. We cannot fund this extra tax for you, even for a short period.
Warning:
Providing false information may lead to financial penalties and prosecution should HMRC investigate the stamp duty land tax return. This is of particular note for parties purchasing a second property where they are not replacing their main home, purchasing for the first time in their own name where a spouse or partner already owns a property or declaring themselves as first-time buyers. We do not have information with regards to all your assets outside of a transaction and/or previous transactions, and so we rely on the information and declarations you provide.
If you have any queries about how the SDLT rates might apply in your case, please contact a member of our New Business Team who would be more than happy to help on 01246 560 568.
Find out how much stamp duty you will pay with our handy stamp duty calculator.
