Taxes Payable When Buying Property in the UK
Taxes are usually the biggest amount payable when buying a property in the UK normally with a mortgage loan and are also payable on stock and share transfers. There are many myths surrounding these duties, so this site has the latest information.
Stamp Duty Rates are set by the government (see table of rates) and are mostly unavoidable, and this website shows you all the costs.
These rates are fixed and are payable upon completion of a purchase of a property and the applicable amount will be deducted by your solicitor on your final account for conveyancing services. So what rates will you pay?
There are several types of rates payable on land-based transactions although most people are in stamp duty land tax payable on residential property sales.
- Stamp Duty Land Tax (SDLT) for residential property.
- SDLT for disadvantaged areas.
- SDLT on new residential leasehold purchases.
- SDLT on non-residential or mixed use properties.
- Stamp Duty on the sale of shares.
Stamp Duty Land Tax for Residential Properties
This is the tax that most people will pay when they buy another property. It is generally the purchaser who pays this tax via their solicitor although some sellers will pay this tax for you as part of a sale agreement.
The percentage you pay depends on the sale price of your property and is currently only payable on a sale value above £125,000 - the current rates are as follows:
The Chancellor of the Exchequer announced a radical change in the rates and structure during his 2014 Autumn statement.
Now the tax is only payable on the portion of the value in the bracket, and came into effect from Midnight 3rd December 2014.
For example; for a house sold for £300,000 the stamp duty payable is now £5,000 - (0% of £125,000 (£0) plus 2% of £125,000 (£2,500) plus 5% of £50,000 (£2,500) equals £5,000). Under the old system, the tax would have been £9,000, a substantial saving.
The following rates are applicable throughout 2015.
- Up to £125,000 - 0%
- Over £125,000 to £250,000 - 2%
- Over £250,000 to £925,000 - 5%
- Over £925,000 to £1,500,000 - 10%
- Over £1,500,000 - 12%
Rates last updated: 3rd December 2014.
The previous rates were:
- Up to £125,000 - 0%
- Over £125,000 to £250,000 - 1%
- Over £250,000 to £500,000 - 3%
- Over £500,000 to £1,000,000 - 4%
- Over £1,000,000 to £2,000,000 - 5%
- Over £2,000,000 - 7%
Higher rates come into force from 1st April 2016 for buy-to-let properties and second homes. Click here for more information.
25th November 2015
New Buy-To-Let rates introduced.
27th April 2015
The Labour leader, Ed Miliband announced today that first-time buyers would pay no Stamp Duty on purchases up to £300,000. This Stamp Duty holiday would take effect under a Labour government and last three years.
Ed stated the £225m funding of this election incentive comes from a 2% increase in Duty for overseas investors and reducing tax avoidance from landlords.
3rd December 2014
New reforms of charging were introduced in the Chancellor's Autumn statement with higher bands for more expensive properties.
Find more details about the history of the rates by the Chancellors over the years.
From 25th March 2010: First-time buyers threshold increased to £250,000 (ie:0% stamp duty paid for homes valued up to £250,000 for first-time buyers only). This will last until 31st December 2011.
From April 2010: 5% rate for homes valued over £1,000,000.
Be aware that the stamp duty rate shown previously is payable on all the amount and is not split according to the percentages. So if you have a sale price of £260,000 then your payment rate is 3% of all of the £260,000. Full breakdown: full Budget 2010 Stamp Duty Rates and when they take effect.
SDLT for Disadvantaged Areas
The rates for disadvantaged areas of the UK are exactly the same as the above except the 1% rate starts at £150,000 rather than the standard £125,000