Stamp Duty Guide
Stamp Duty, or Stamp Duty Land Tax as it applies to the purchase of property, is a form of tax paid by the purchaser of a house 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.
New stamp duty thresholds announced in the budget - 24th March 2010. First time buyers exempt up to £250,000 (For two years until 24th March 2012). From April 2011, properties over £1,000,000 will be subject to 5% stamp duty.
For some consumers at the lower end of the house price, 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. When a shared ownership lease is granted, the purchaser or purchasers can either pay stamp duty land tax at each separate stage of their purchase.
They pay as and when they buy each percentage of their property. Alternatively, the property buyer can make a market value election and pay tax as if the property had been purchased outright from the start.
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.
