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Stamp Duty explained

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Tue 08 Nov 2016

Stamp Duty explained

Stamp Duty Rates Explained

One question that we are regularly asked is just how much stamp duty do I need to pay? So we thought we would help by providing a brief guide.   

 

Stamp Duty Rates

The amount of stamp duty you pay depends on the purchase price of the new home you are purchasing – the more expensive the property, the more you have to pay. 

The current starting threshold is £125,000; under that amount, you won’t have to pay anything. The rates then increase in increments.  The table below shows the different property purchase price bands and their stamp duty rate (as at current bandings).

 

Price Percentage
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and over 12%

 

In the past Stamp Duty operated under a slab system (where you'd pay a single rate on the entire property price) but this has now been replaced with a more progressive system.  Under the new system you only pay the rate for the proportion that is at that rate.  For example, if you were to buy a property for £300,000 then the Stamp Duty would be calculated as follows:
 

  • No stamp duty for the first £125,000 = £0
  • 2% for the proportion that is between £125,001 to £250,000 = £2,500
  • 5% for the proportion that is between £250,001 to £925,000 = £2,500

 Each figure is then combined £0 + £2,500 + £2,500 = £5,000

Under the old slab system you would have had to pay 3% on the entire purchase price of £300,000 and so the stamp duty to be paid would have been £9,000.  With the new system in place you are saving £4,000.