Do you know your stamp duty bands?

When purchasing a property over £125,000 you will be required to pay Stamp Duty (SDLT), but are you aware of how this is calculated and at what point you will need to pay?

Chancellor Philip Hammond has abolished Stamp Duty for first-time buyers on purchases of up to £300,000, and on the first £300,000 of purchases up to £500,000.



When purchasing a property over £125,000 you will be required to pay Stamp Duty (SDLT), but are you aware of how this is calculated and at what point you will need to pay?

The way Stamp Duty is calculated was reformed in December 2014, and further reforms were put in place in April 2016 to try and restrict purchasers looking for a second home by placing a 3% surcharge on all investment purchases. It can all seem a bit complicated at face-value but we’re here to help make things clear and simple.

The December 2014 changes meant that the fee is calculated on a ‘progressive’ basis - once a bracket is surpassed, you will pay the higher percentage incrementally. For example; for the first £125,000 you pay no stamp duty, you then pay 2% on the portion from £125,000 up to £250,000, then 5% on the portion £250,000 up to £925,000, then 10% on £925,000 to £1.5million, then 12% on anything above £1.5m.

Purchase price bracket:	SDLT rate:
Up to £125,000	0%
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Therefore, if the property you are buying is worth £550,000, you will pay:

- 2% of the portion from £125,001 to £250,000 is £2,500

- 5% of the portion from £250,001 to £925,000 is £15,000

- The total SDLT due is: £17,500



Stamp duty applies even if you swap properties and no money exchanges. You will still need to pay tax on the property you are moving into. The only situation where it doesn’t apply is if you are transferring the share of a house or flat to another person (for example, this may happen in a divorce/separation situation).

Second homes and investments

If you are buying a second home or investment, you need to factor in an extra 3% charge if the property you are buying is £40,000 or over (anything under £40,000 is exempt).

Purchase price bracket:	SDLT rate for second homes:
Up to £125,000	3%
The next £125,000 (the portion from £125,001 to £250,000)	5%
The next £675,000 (the portion from £250,001 to £925,000)	8%
The next £575,000 (the portion from £925,001 to £1.5 million)	13%
The remaining amount (the portion above £1.5 million)	15%

When you need to pay stamp duty

Stamp Duty is payable upon, or within 30 days, of completion. In general, your solicitor will handle the SDLT transaction but ultimately you are responsible. Double check you are happy with the figure your solicitor is agreeing to and that the money has been paid.