Stamp Duty UK: Everything You Need To Know

An often overlooked area, a proper consideration of the Stamp Duty UK due is essential to anyone looking to buy residential property. 

What is Stamp Duty UK?

Stamp Duty UK is a tax due on the purchase of property (that is, land) in England. 

Taxes differ in Wales and Scotland, so Stamp Duty UK may vary depending on what part of the UK the property is situated in. 

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The tax is payable by the buyer of the property, so stamp duty UK should be considered at an early stage, ideally when considering the budget for the property, as it will need to be paid promptly on completion of the purchase. 

Traditionally Stamp Duty UK was a tax on the deed (legal document) transferring the ownership of the land. 

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Payment was evidenced by a stamp on the top of the document, hence ‘Stamp Duty’. Over time this has been modernised, Stamp Duty UK is now known as Stamp Duty Land Tax (or SDLT) in England. 

How Much is Stamp Duty UK?

Stamp Duty UK is calculated as a percentage of the property purchase price. For most buyers, nothing is paid on the first £125,000 (or for purchases under this value), with a sliding scale above this. This means the higher the purchase price, the more Stamp Duty UK the purchaser will pay.

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Traditionally this has been a fairly simple calculation, however in recent years Stamp Duty UK has become a significantly more complex tax, with additional criteria and rates depending on the purchaser’s situation (eg. How many properties they currently own, or whether they are resident in the UK). 

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Advising on Stamp Duty UK has become a growing specialism for tax professionals. Many purchasers will need to take specialist independent advice in addition to appointing a conveyancing lawyer to ensure that they are paying correct rates and (more importantly!) taking advantage of any exemptions that might be available.

When Does the Stamp Duty Holiday End? 

The Stamp Duty holiday has been the subject of many headlines in recent months, however leaving the politics to one side, all buyers really want to know is what do we mean by ‘stamp duty holiday’, and when does stamp duty holiday end. 

What Do We Mean By ‘When Does Stamp Duty Holiday End’?

In July 2020 the government put in place a temporary reduction in Stamp Duty rates in response to the pandemic. The price below which basic rate Stamp duty would not be payable was increased from £125,000 to £500,000. Savings of up to £15,000 could be made by many buyers taking advantage of this holiday. 

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This was intended to be a temporary relief. Originally the holiday was due to end on the 31st March 2021, however this was extended. At this point the terms of the rate relief were also varied slightly, so the answer to ‘when does stamp duty holiday end’ now differs depending on a buyer’s position. 

Ok, So When Does The Stamp Duty Holiday End For Me?

Given the recent changes in the terms of Stamp Duty and the complexity of the calculation, rather than asking when does stamp duty holiday end, it may be better to consider ‘what is the current stamp duty position for my purchase’ and ‘are there any changes coming up that will affect this’. The original holiday (increase in the zero rate band to £500,000) ended on the 30th June 2021. 

However, rather than revert back to the pre-holiday level (£125,000) this was reduced to £250,000. This means that there is still a saving against the pre-holiday rates (of up to £2,500). This part of the holiday is in place until the 30th September 2021, after which the zero rate band will revert to £125,000 (unless the government announces any further changes).

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However, there are other aspects to the changes which will affect many buyers. The first time buyer’s discount has been brought back from the 1st July. Similarly, on the 1st June a new higher rate for buyers not resident in the UK was bought in. 

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There can therefore be a number of answers to ‘when does stamp duty holiday end’ and many buyers will benefit from taking specialist advice in relation to their Stamp Duty liability to ensure that they are paying the correct rate.