Stamp Duty in the UK is the quaint old term for the government’s slice of the action on your home purchase. That’s right it’s a tax. It’s not just the seller who makes money when you buy a house. The Government gains too – in the form of stamp duty. It makes around £5 billion a year from this 300-year-old property transfer tax. Unless you’re buying in an area it has designated as ‘disadvantaged’, you’ll be obliged to pay if your chosen property costs more than £125,000.
Stamp Duty – Contents
Current Stamp Duty Rates
Before the “Chancellor’s Autumn Statement” of December 2014 stamp duty was charged as a fixed percentage strictly on property price.
These are the new Stamp Duty Rates Bands from 4/12/2014
| Purchase price of property | Stamp Duty Payable |
| Up to £125,000 | 0 |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| £1,500,001 plus | 12% |
For example:
Previous Stamp Duty Rates Bands up to 3/12/2014
The amount charged depends on the purchase price of the property. The previous rates for UK Stamp Duty were as follows:
| Purchase price of property | Stamp Duty Payable |
| Up to £125,000 | 0 |
| £125,001 to £250,000 | 1% |
| £250,001 to £500,000 | 3% |
| £500,001 plus | 4% |
For prices higher than these see the official UK Government stamp duty figures here To see the exact amount you would pay for a property see the Stamp Duty Calculator
Stamp Duty Holiday for First Time Buyers
First time buyers do not have to pay stamp duty for purchases less than £250,000 This “tax holiday” started from March 25th 2010 and – at the time of writing – will run for 2 years. Property deals completing after March 25th are eligible Anyone who has ever owned or had a share in a property – any where in the world – is not eligible. A parent buying a property for their child – the parent having owned property before and the child not – would not be eligible (There may be some ways around this sing a guarantor mortgage but you would need to check with a mortgage broker. A couple, or a group of friends etc, who are buying a house together- where one of the partners has owned property before – could put the house in the name of the first time buyer only and thereby save on the stamp duty charge Buyers will have to sign a tax return at the time of purchase stating that they are claiming the first time buyers relief from Stamp Duty.
Apportioning / “AVOIDING” Stamp Duty
It’s important to keep the stamp duty bands in mind when you agree a purchase price for a property. Buy for £125,000 and there’s no tax due, but pay £125,001, and you’ll face a bill for £1,250.01.
There’s an even more painful jump if your property costs just above the £250,000 barrier. Pay exactly £250,000, and you’ll be charged £2,500. Pay £250,001 and this leaps £5,000 (and some loose change) to £7,500.03.
When the price of a property is just above the £125,000, £250,000 or £500,000 threshold, ‘apportioning’ is often used to push it back into a lower stamp duty bracket.
The purchaser and seller agree a price that falls just below the threshold, but the purchaser undertakes to pay an additional sum for ‘fixtures and fittings’ – which could include things like curtains, carpets or white goods – taking the total price to a level the seller is happy with.
But be warned: Revenue & Customs checks a proportion of these transactions and will challenge any that arouse its suspicions. So if you come to an apportioning deal, make sure you can prove the sum involved was realistic – and that the transaction actually took place – or the Revenue could come after you for unpaid tax. Remember, tax evasion is a serious matter and in extreme cases can lead to a prison sentence.
To see the exact amount you would pay for a property see the Stamp Duty Calculator