Stamp Duty Rates and Examples

Stamp Duty Land Tax (SDLT) Rates

Stamp Duty is a tax you pay on property purchases. The rate of tax you pay is a percentage of the property selling price. But it’s not just a simple percentage, rates of stamp duty increase over different thresholds.

Here are the current Stamp Duty Land Tax rates for England, Wales and Northern Ireland in a fancy little table:

Purchase price Residential SDLT rates Additional property rates*
0* to £125,000 0% 3%
Over £125,001 to £250,000 2% 5%
Over £250,001 to £925,000 5% 8%
Over £925,001 to £1.5 million 10% 13%
Over £1.5+ million 12% 15%
*Transactions under £40,000 do not require a tax return to be filed with HMRC and are not subject to the higher rates.

Examples

If you buy a house for £300,000, the Stamp Duty you owe is calculated as follows:

  • 0% on the first £125,000 = £0
  • 2% on the next £125,000 = £2,500
  • 5% on the final £50,000 = £2,500
  • Total SDLT = £5,000

If you already own a property and you’re buying an additional property for £300,000, the Stamp Duty you owe is calculated as follows:

  • 3% on the first £125,000 = £3,750
  • 5% on the next £125,000 = £6,250
  • 8% on the final £50,000 = £4,000
  • Total SDLT = £14,000

Use our Stamp Duty Calculator to work out how much tax you’ll pay:

Stamp Duty Calculator

Replacing Your Main Residence

If the property you’re buying is replacing your main residence (maybe you’re moving home) and your current residence is sold, you DON’T pay the extra 3% Stamp Duty.

But if there’s a delay in selling your current residence and you still own it after completing your new property purchase, you DO pay the higher rate (because you own 2 properties).

If you sell your previous home within 36 months, you can get a refund on the higher rate Stamp Duty you paid. You can apply for a repayment of the higher rates for additional properties online, click here.

Example Scenarios

HMRC produced an updated SDLT Guidance Note in November(2016), which include these sample scenarios:

Example 1 -married couple

Mr and Mrs S, a married couple, each own a residential property, with neither having any interest in the other’s property. They both live in the property owned by Mrs S: the property owned by Mr S is rented out. Mrs S is selling her property and they are jointly purchasing a new one, which will be their new main residence. Mr S will retain his rented out property.

The higher rates will not apply to the joint purchase by Mr and Mrs S of a new main residence. As they are married and have both lived in the property owned by Mrs S as their main residence they will both be treated as replacing their main residence.

Example 2 – not married

Mr P and Ms B, who are not married to one another, each own a residential property, with neither having any interest in the other’s property. They both live in the property owned by Ms B: the property owned by Mr P is rented out. Ms B is selling her property and they are jointly purchasing a new one, which will be their new main residence. Mr P will retain his rented out property.

The higher rates will apply to the joint purchase of a new main residence by Mr P and Ms B. As they are not married (or in a civil partnership) Mr P will not be treated as replacing his main residence as, even though he has been living in the property owned by Ms B, he has no interest in the property Ms B is selling.

Example 3 – new main residence

Mr T owns both a main residence and a buy-to-let property. He is in the process of purchasing a new main residence. He intends to keep his current main residence and rent it and sell his buy-to-let property, although the sale may not take place until after the purchase of his new property.

The higher rates will apply to the purchase of the new property as following the purchase Mr T will own an additional residential property and is not replacing his main residence. Mr T will not be able to claim a refund when he sells his current buy-to-let property as refunds are only available where a previous main residence has been replaced.

Example 4 – buy-to-let

Ms G currently owns two buy-to-let properties, which she has owned for a number of years. She sold her previous main residence six months ago and moved temporarily into one of her buy-to-let properties, whilst looking for a new main residence.

Ms G will be treated as replacing her main residence if the property she sold six months ago was her only or main residence and completion occurred on or before 26 November 2018. The fact that she lived in one of her buy-to-let properties in the interim period does not affect this.

Example 5 – mixed use property

Mr & Mrs C currently own a mixed use property, a shop with a flat above, both of which are rented out. They currently live in rented accommodation but are in the process of purchasing a new property which will be their main residence.

The higher rates will apply to the purchase by Mr and Mrs C as they already own an interest in another residential property: the flat above the shop.

Example 6 – 25% share

Ms D currently owns two residential properties – her main residence and a 25% share in a second property that she owns jointly with 3 friends, each having a 25% share in the property. Ms D now wishes to purchase one of her friend’s 25% share in the jointly owned property.

The higher rates will apply, as Ms D will be purchasing a major interest in a property, is not replacing her main residence and owns an interest in another property.

Example 7 – buy-to-let and 50% share

Miss L owns two residential properties – a buy-to-let and a 50% share in a property that she owns jointly with her sister. The jointly owned property is her main residence. She is considering purchasing the remaining 50% of her main residence from her sister.

The higher rates will apply as Miss L is purchasing a major interest in a residential property, is not replacing her main residence and owns an interest in another residential property.

Example 8 – gifted a half share

Ms W has just been gifted a half share in a property. Her share is worth £120,000. She also owns a house, which is her family home.

The higher rates will not apply if no consideration of any kind is given for the property. However, if Ms W took over responsibility for half of the outstanding mortgage on the property this would count as consideration and the higher rates would apply. Further guidance on this is available on GOV.UK at https://www.gov.uk/guidance/sdlttransferringownership-of-land-or-property#if-you-transfer-property-because-of-divorceseparation-orthe-end-of-a-civil-partnership.

Example 9 – gifted a half-share

Mr F was gifted a half-share in a flat some years ago. The flat has always been rented out and his share is now worth £100,000. Mr F owns no other property but is in the process of purchasing a flat which will be his main residence.

The higher rates will apply to the purchase of the new property as Mr F already owns an interest in another residential property and is not replacing his main residence.

Example 10 – transferring 50% of a buy-to-let

Mr I is transferring 50% of a buy-to-let property that he owns to his wife, Mrs I. Mrs I is paying some cash and taking over responsibility for half the mortgage debt. Mrs I owns no other residential property but Mr I owns a number of other buy-to-let properties.

The higher rates will apply to the transfer as Mr I owns other residential properties. As a married couple other residential property owned by either spouse is taken in account in determining whether the higher rates apply.

Example 11 – transferring equity to wife

Mr and Mrs X jointly own two properties; they live in one as their main residence and rent the other out. Mr X is transferring his share in their main residence to his wife, who will take over sole responsibility for the mortgage.

The higher rates will apply as Mrs X owns an interest in another residential property and is not replacing her main residence. The higher rates will apply to the value of the mortgage taken over by Mrs X.

Example 12 – buy to merge two properties

Ms Q is purchasing the house next door to her current home, which she intends to merge with her current home.

The higher rates will apply as following the purchase Ms Q will own an additional residential property and is not replacing her main residence. A refund of the higher rates cannot be claimed once the work to merge the two properties is complete as refunds are only available where a previous main residence has been replaced.

Example 13 – extending the lease

Mr E owns two properties, both flats: he lives in one and rents out the other. He is currently in the process of extending the lease on his main residence.

The higher rates will apply as Mr E is purchasing a major interest in a residential property, owns an interest in another residential property and is not replacing his main residence.

Example 14 – buy-to-let

Mr K currently owns one buy-to-let property and is in the process of purchasing another one. He lives in rented accommodation. He may consider selling one of the properties within the next couple of years.

The higher rates will apply to the purchase of the second buy-to-let property as following the purchase Mr B will own an additional residential property and is not replacing his main residence. A refund will not be available if Mr K subsequently sells one of his buy-to-let properties as a refund is only available where a main residence has been replaced.

Example 15 – increasing share in a shared ownership

Ms R owns a buy-to-let property and a 25% interest in a property under a statutory shared ownership arrangement and which is her main residence. She is in the process of increasing her share in the shared ownership property to 80%. She paid no SDLT when she purchased her initial share as the amount she paid for this was under the threshold.

As Ms R owns another residential property the higher rates will apply to the purchase of the additional share in the property subject to the statutory shared ownership arrangement unless the replacement of only or main residence exception applies.

Example 16 – armed forces personnel stationed overseas

Mr N is in the armed forces and is currently stationed overseas. He owns two residential properties in the UK which are rented out. Due to the nature of his job he has never been able to live in either of the properties, although his intention has always been to live in one of them when he left the armed forces. This property is treated as occupied as a residence for Capital Gains Tax purposes. Mr N is retiring soon and is planning to sell this property and purchase a new one which will be his main residence.

The higher rates will apply to the purchase by Mr N of the new property even if he sells one of his rented properties, as neither has been his main residence. The SDLT rules do not allow armed forces personnel to treat a dwelling that they have never lived in as their main residence.

Example 17 – property builders

Mr R owns a house building company which often takes properties from purchasers in partexchange for a new property. Schedule 6A of the Finance Act 2003 provides relief for such acquisitions, provided certain conditions are met.

Although there are no specific reliefs from the higher rates for property companies, other SDLT reliefs will still be available including those in Schedule 6A of the Finance Act 2003, provided the conditions for the relief are met.

Example 18 – inherited 50% share

Two brothers (Mr A & Mr J) recently inherited their parents’ house, each owning a 50% share. Mr A owns no other property at present but is in the process of purchasing a flat, which will be his main residence.

The higher rates will not apply to the purchase of the new property by Mr A provided that this is purchased within 3 years of inheriting the property, and during that 3 year period the interest held by Mr A in the inherited property, together with any interest held by his spouse or civil partner, does not exceed 50%.

Example 19 – helping son buy his first property

Mr and Mrs M are helping their son buy his first property by providing the deposit for a flat which will be his main residence. Mr and Mrs M currently own just one property, the family home. Due to the bank’s lending criteria they require Mrs and Mrs M to be a party to the mortgage and be on the deeds of the property. On the same day as the purchase a deed will be executed which will provide that Mr and Mrs M have no interest in the property and that their son has full beneficial interest in the property. The higher rates will not apply because Condition C is not met.

Example 20 – buying property with a annexe

Mr and Mrs Z are in the process of purchasing their first property, to be used as their main residence. Attached to the main house is a small annexe. Although the annexe has all the amenities for independent living (e.g. lounge, bedroom, kitchen and bathroom) it does not have separate access from the main house and does not have separate gas, electricity or water supplies.

For the purposes of the SDLT higher rates, the house and annexe would be treated as a single dwelling. As Mr and Mrs Z own no other residential property the higher rates will not apply.

Example 20 – buying property with a annexe

Mr and Mrs Z are in the process of purchasing their first property, to be used as their main residence. Attached to the main house is a small annexe. Although the annexe has all the amenities for independent living (e.g. lounge, bedroom, kitchen and bathroom) it does not have separate access from the main house and does not have separate gas, electricity or water supplies.

For the purposes of the SDLT higher rates, the house and annexe would be treated as a single dwelling. As Mr and Mrs Z own no other residential property the higher rates will not apply.

Example 21 – new main residence

Mr Y owns 2 buy-to-let properties and a main residence. He is in the process of selling his current main residence and has had an offer accepted on a new main residence. There is a separate 2 bedroom cottage in the grounds of the new property, which is used by the current owner’s parents. The cottage has all the amenities for independent living, has its own gas, electricity and water supplies. The total purchase price is £1,000,000, with the cottage and
its garden being valued at £150,000.

As the cottage is in the grounds of the main house and worth less than a third of the total purchase price, for the purposes of the higher rates Mr Y may claim multiple dwellings relief and will be treated as purchasing only one property. As he is replacing his main residence the higher rates will not apply.

Example 22 – converted barns

Ms V currently only owns one property, her main residence. She is in the process of purchasing a property which, in addition to the main house has three barns in the grounds that have been converted into holiday lets. Ms V intends to rent out both the main house and the barns. The total purchase price is £1,200,000, with the main house and its garden and grounds being valued at £650,000 and each of barns at £150,000.

As the barns are worth more than one third of the total purchase price Ms V will be treated as purchasing four properties. As she already owns another residential property and is not replacing her main residence the higher rates will apply, although multiple dwellings relief may be claimed.

Example 23 – before 26 November 2015

Mr B exchanged contracts in October 2015 to purchase a flat which is due for completion in January 2017. Mr B owns a number of buy-to-let properties and intends to add this one to his portfolio. In May 2016 the contract was varied to add his sister Ms L as a joint purchaser of the property.

Transitional provisions provide that where a contract was entered into before 26 November 2015 but is not completed until on or after 1 April 2016, the higher rates do not apply provided the contract is not varied after that date. As the contract was varied in May 2016 the transitional provisions will not apply and, as Mr B owns other residential property, the higher rates will be due on completion of the purchase.

Example 24 – living abroad

Miss M has just returned to the UK after working abroad for a number of years and is in the process of purchasing a new home, which she hopes to complete on by the end of December 2016. She sold her previous main residence in 2009, before moving abroad, but retained a buy-to-let property in the UK. Miss M lived in rented accommodation while abroad.

Provided Miss M purchases her new main residence on or before 26 November 2018, and has not acquired another main residence in the interim period, she will be treated as replacing her main residence and the higher rates will not apply.

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