Stamp Duty Rules

2nd September 2008: the stamp threshold was adjusted from £125,000 to £175,000 - this is the level at which the tax becomes payable. This was announced by the Chancellor Alistair Darling in attempt to boost the housing market following concerns of a looming recession and weeks of doubt over whether or not stamp duty should be reviewed. This additional relief was lost after 31 December 2009 and replaced by a limit of £250,000 for FIRST TIME BUYERS ONLY for 1 year

Normal Stamp Duty Land Tax Rates (note changes above)

Please note that the applicable rate of Stamp Duty Land Tax must be applied to the whole of the consideration paid to acquire the land / buildings

Land Transactions with an effective date on or after 23rd March 2006

Rate Residential land in disadvantaged areas Non-residential in disadvantaged areas All other land in the UK - Residential All other land in the UK - Non-residential
Zero <£150,001 <£150,001 <£125,001 <£150,001
1% >£150,000
<£250,001
>£150,000
<£250,001
>£125,000
<£250,001
>£150,000
<£250,000
3% >£250,000
<£500,001
>£250,000
<£500,001
>£250,000
<£500,000
>£250,000
<£500,000
4% >£500,000 >£500,000 >£500,000 >£500,000
5% >£1m >£1m >£1m >£1m

N.B. Disadvantaged Area Relief for non-residential land transactions is not available for non-residential land transactions with an effective date on or after 17 March 2005

However the relief is preserved for:

  • the completion of contracts entered into and substantially performed on or before 16 March 2005
  • the completion or substantial performance of other contracts entered into on or before 16 March 2005, provided that there is no variation or assignment of the contract or sub-sale of the property after 16 March 2005 and that the transaction is not in consequence of the exercise after 16 March 2005 of an option or right of pre-emption.

 

New leases (lease duty) : Duty on Rent

Rate Net present value of rent -
Residential
Net present value of rent -
Non-residential
Zero £0 - £125,000 £0 - £150,000
1% Over £125,000 Over £150,000


Please note that when calculating duty payable on the 'NPV' (Net Present Value) of leases, you must reduce your 'NPV' calculation by the following before applying the 1% rate

  • Residential - £125,000
  • Non-Residential - £150,000

Properties in disadvantaged areas benefit from stamp duty relief. A list of areas can be found here Disadvantaged Areas

Frequently asked stamp duty questions

Q. I own a house jointly with my partner and we are splitting up, do I have to pay stamp duty?

You may have to. If you are taking over the house the Inland Revenue will take account of any money you are paying your partner for their share plus the amount of the additional mortgage you are taking on. For instance if you are paying £30,000 and you have a joint mortgage for £100,000 the Inland Revenue will work out duty on half the mortgage (£50,000) plus £30,000, making £80,000 so you will pay £800 stamp duty.

If you are getting divorced and the property is being transferred because of this, you will not have to pay any duty. You will need to add a clause to the stamp duty document stating that "I hereby certify that this document it is exempt under category H in the schedule to the Stamp Duty exempt instruments regulations 1987".

Q. I am transferring half my house to someone as a gift, do they have to pay duty?

If there is a mortgage on the property the Inland Revenue will take duty on half the mortgage debt. If this is less than £125,000 no duty will be payable.

If there is no mortgage debt the transaction will be exempt under category L in the 1987 exempt instrument regulation and there is nothing to pay.

Exemptions in certain areas of the UK are available