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First time buyer? – Stamp duty explained

Posted by admin on May 28, 2014
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Stamp duty explained

Find out current stamp duty rates in England and Wales.

When you buy a house or flat that’s going to be your primary home (rather than a holiday home or buy-to-let), you will pay stamp duty on everything above £125,000. If it’s a buy-to-let or second home, you pay stamp duty on any property costing over £40,000.

Stamp duty is tiered, meaning that you pay different rates on different portions of the property price. Current stamp duty rates for first homes are set out in the graphic below. You can scroll down to see an example of how the tier system works and to find out how stamp duty works for buy-to-let and second home buyers.

If you’re concerned about what stamp duty means for you, it’s worth speaking to a mortgage adviser.

Stamp duty rates

Because stamp duty is tiered, you will pay a different stamp duty rate on different portions of the property value. When you buy a property you’re planning to live in (ie not a buy-to-let property or second/holiday home), you won’t pay any stamp duty on the first £125,000. You’ll then pay 2% on the portion up to £250,000 and 5% on the portion up to £925,000. Between that point and £1.5 million, it’s 10% – then 12% on anything over £1.5 million.

05 Stamp duty-01

Take a look at this example to see how it works:

  • Property price: £275,000
  • Portion 1: £0 – £125,000 – 0% tax, so total paid for this chunk of the purchase price = £125,000
  • Portion 2: £125,000.01 – £250,000 – 2% tax (£2,500) + £125,000 = £127,500
  • Portion 3: £250,000.01 – £275,000 – 5% tax (£1,250) + £25,000 = £26,250
  • Total paid: £278,750 (£3,750 of which is stamp duty)

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