Trusted Guide to Stamp Duty Rates in England, Scotland and Wales property tax advice, United Kingdom home buying tips
A Quick Guide to Stamp Duty Rates in England, Scotland and Wales
21 Dec 2019
A quick guide to stamp duty rates in UK – put simply, stamp duty is a tax that you have to pay when you buy a property above a certain price. In other words, it is an additional cost that you need to build into the price you will pay to purchase a property along with other expenses, such as removal and legal costs. The rules surrounding stamp duty differ according to where you will be buying. This is because how the tax is applied is a devolved matter.
As such, stamp duty applies in a different ways in Wales and Scotland as compared to England. Indeed, some of the terms differ as well as the rates. Remember that if you live in Wales and will be buying a property in Scotland, for example, then the Scottish rules on stamp duty will apply. It is where the property is located – as opposed to where you currently live – that counts. Read on to find out more about stamp duty rules in England, Wales and Scotland.
A Quick Guide to Stamp Duty Rates in England, Scotland and Wales – United Kingdom
Stamp Duty Land Tax in England
Stamp duty is officially known as Stamp Duty Land Tax (SDLT) in England. Anyone buying a residential property for £125,000 or more will need to pay it within 14 days of completing their purchase. Usually, your conveyancing solicitor will deal with this transaction for you but you need to confirm the payment has been made or you may face legal consequences from HMRC. It applies to freehold properties, leasehold properties, shared ownership tenures and properties that are part-exchanged rather than bought outright for their cash value. Land which is non-residential is also subject to SDLT but the threshold at which it must be paid is higher for this sort of property, currently set at £150,000.
Residential properties that are sold at a value of over £125,000 up to a value of £250,000 must pay SDLT at two percent for every pound over the £125,000 threshold. For example, a house that is sold for £135,000 will be £10,000 over the threshold. Since two percent of £10,000 is £200, this is how much tax you would need to pay. The rates go up for asking prices over £250,000, however. Every pound above that amount is subject to a tax levied at 5 percent.
Properties sold at anything from £925,000 to £1.5 million are subject to a third rate of SDLT, set at 10 percent. Finally, any home that is sold over £1.5 million will be subject the highest rate, currently 12 percent. The government provides online calculators that allow you to work out how much tax would need to be paid according to its value. As well as calculating the amount that applies in each of the pricing bands, these tools will also work out how much applies if you are a first-time buyer. Properties worth less than £500,000 face lower SDLT rates but only if you have never owned your own home before.
Land and Buildings Transaction Tax in Scotland
Land and Buildings Transaction Tax (LBTT) has replaced SDLT in Scotland since 2015. It works in much the same way but different rates and thresholds apply. LBTT is zero-rated for residential properties worth less than £145,000. From £145,000 to £250,000, it is charged at two percent, then at five percent from £250,000 to £325,000. A rate of ten percent applies between £325,00 and £750,000. For any values over £750,000, LBTT is charged at 12 percent.
Land Transaction Tax in Wales
In Wales, land transaction tax (LTT) applies on sales of residential properties worth more than £180,000 and at £150,000 if they are non-residential. LTT is banded, just like SDLT and LBTT, but different rules apply for second homes where more must be paid. No LTT applies beneath £180,000 but a rate if 3.5 percent does for homes worth over £180,000 but less than £250,000. From that level to £400,000, the rate is 5 percent, then 7.5 percent from £400,000 to £750,000. The final two bands are 10 percent from £750,000 to £1.5 million and 12 percent for values over £1.5 million.
UK Tax Tools and Guides
UK Tax – Useful Tools and More Information
Stamp Duty Calculator by Yopa – One of the few tools allowing you to select between England, Wales and Scotland.
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