Update: Temporary exemption on Stamp Duty Land Tax (SDLT)
The Chancellor of the Exchequer, Alistair Darling, has announced that from 3rd September he will introduce a temporary exemption or “holiday” from stamp duty for residential property purchases worth no more than £175,000.
For the exemption to apply your purchase must:
- Consist entirely of residential property.
- Have a total purchase price of not more than £175,000.
- In the case of a lease, the grant or assignment must not be less than 21 years.
- The effective date of the land transaction (normally the date of completion) is on or after 3rd September 2008 and before 3rd September 2009.
There are no circumstances in which this exemption will be available for any land transactions either before 3rd September 2008 or after 3rd September 2009.
How much will you have to pay the UK taxman?
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When you purchase a house or a piece of land that you intend to build a house on you will have to pay stamp duty (Technically: stamp duty land tax or SDLT) on the purchase price. Only the purchaser of the house or land has to pay stamp duty, not the seller. However the seller may be liable for other taxes.
While stamp duty was originally a tax on the documents, SDLT is a tax on transactions and it is therefore more difficult to avoid paying.
Stamp duty (SDLT) is calculated using the following bands:
| Residential Stamp Duty (With Exemption) | |
| House or residential land purchase price | Stamp duty rate [1] |
| Up to £175,000 | 0% |
| Greater than £175,000 up to £250,000 | 1% |
| Greater than £250,000 up to £500,000 | 3% |
| Over £500,000 | 4% |
- New homes that meet the "Zero Carbon" standard, costing no more than £500,000 are exempt from stamp duty.
Those costing more, are subject to a £15,000 reduction in tax. This applies for a five year period, starting from 1st October 2007.
Wealth Warning
Stamp duty is charged on the total purchase price, so if the amount paid just falls into a higher band you will see a marked increase in the amount payable.
For example:
If the purchase price was £250,000, the stamp duty payable will be £2,500, one percent of the price.
If however, the purchase price was just £1 more, at £250,001, the stamp duty payable will increase to £7,505; three percent of the total.
The extra £1 on the purchase price has resulted in an extra £5,005 in tax.
Just in case you're wondering where the £5 came from, three percent of £1 is 3 pence, but stamp duty is always rounded up to the nearest £5.
| Stamp Duty Examples (With Exemption) | ||
| House purchase price | Stamp duty payable | Stamp duty payable on a |
| Up to £125,000 | £0 | £0 |
| £130,000 | £0 | £0 |
| £140,000 | £0 | £0 |
| £150,000 | £0 | £0 |
| £175,000 | £0 | £0 |
| £180,000 | £1,800 | £0 |
| £190,000 | £1,900 | £0 |
| £200,000 | £2,000 | £0 |
| £225,000 | £2,250 | £0 |
| £250,000 | £2,500 | £0 |
| £275,000 | £8,250 | £0 |
| £300,000 | £9,000 | £0 |
| £350,000 | £10,500 | £0 |
| £400,000 | £12,000 | £0 |
| £450,000 | £13,500 | £0 |
| £500,000 | £15,000 | £0 |
| £600,000 | £24,000 | £7,000 |
| £700,000 | £28,000 | £13,000 |
| £800,000 | £32,000 | £17,000 |
| £900,000 | £36,000 | £21,000 |
| £1,000,000 | £40,000 | £25,000 |
Stamp Duty without Temporary Exemption
On the 2nd September 2008, the Chancellor, Alistair Darling, announced a one year exemption on stamp duty for some residential purchases.
The figures shown in this section refer to property purchases where the temporary stamp duty exemption does not apply.
This section applies to your property purchase if:
- The purchase was completed before 3rd September 2008.
- Does not consist entirely of residential property.
- It is a Grant or assignment of a lease for less than 21 years.
- Subject to future government policy changes, this section will apply to all properties after 3rd September 2009.
Stamp duty (SDLT) is calculated using the following bands:
| Residential Stamp Duty: Budget 2008 (Without Exemption) | |
| House or land purchase price | Stamp duty rate [2] |
| Up to £125,000 or £150,000 if the property is in a disadvantaged area [1] | 0% |
| Greater than £125,000 (or £150,000) up to £250,000 | 1% |
| Greater than £250,000 up to £500,000 | 3% |
| Over £500,000 | 4% |
- Disadvantaged area relief is available in 1,997 areas across the UK, selected by reference to national Indices of Deprivation.
These areas are based on local government wards and electoral divisions in England, Wales and Northern Ireland, and postcode areas in Scotland.
More information can be found on the HM Revenue & Customs page: Disadvantaged Areas. - New homes that meet the "Zero Carbon" standard, costing no more than £500,000 are exempt from stamp duty.
Those costing more, are subject to a £15,000 reduction in tax. This applies for a five year period, starting from 1st October 2007.
| Stamp Duty Examples (Without Exemption) | ||
| House or land purchase price | Stamp duty payable | Stamp duty payable on a |
| Up to £125,000 | £0 | £0 |
| £130,000 | £1,300 |
£0 |
| £140,000 | £1,400 |
£0 |
| £150,000 | £1,500 |
£0 |
| £175,000 | £1,750 | £0 |
| £200,000 | £2,000 | £0 |
| £225,000 | £2,250 | £0 |
| £250,000 | £2,500 | £0 |
| £275,000 | £8,250 | £0 |
| £300,000 | £9,000 | £0 |
| £350,000 | £10,500 | £0 |
| £400,000 | £12,000 | £0 |
| £450,000 | £13,500 | £0 |
| £500,000 | £15,000 | £0 |
| £600,000 | £24,000 | £7,000 |
| £700,000 | £28,000 | £13,000 |
| £800,000 | £32,000 | £17,000 |
| £900,000 | £36,000 | £21,000 |
| £1,000,000 | £40,000 | £25,000 |
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