How stamp duty rates differ in England, Scotland and Wales

Stamp duty is a government tax on buying property or land that is charged when the value of any property or land purchase is over a certain financial threshold. Although all parts of the United Kingdom charge stamp duty, it isn’t called exactly the same thing in the different parts of the U.K. 

There are also different financial thresholds and duty rates payable, depending on which country of the U.K. the land or property is located in. These rates can change annually, usually when new the tax year starts every April, so ask your estate agent for the most up-to-date advice.

Because it’s a government tax, it is important that stamp duty is paid in a timely fashion to the relevant tax authority. If it isn’t the purchaser is liable to be slapped with a late payment penalty. Usually the conveyancer or solicitor handling the purchase will ensure the payment is made on behalf of the purchaser.

England

In England, this tax is called Stamp Duty Land Tax (SDLT). The taxable duty, payable to HMRC, kicks in for residential property that costs more than £125,000. For purchases of non-residential properties and land, the financial threshold starts at £150,000 and over. 

Residential properties purchases between £125,000 – £250,000 attract stamp duty of 2%. The duty then rises incrementally to 12% for properties over £1.5 million. Stamp duty is payable at the different rates on one purchase depending on the total cost.

For first time buyers the rules are slightly different and more advantageous for property purchased up to a value of £500,000. If the property value is less than £300,000, first-time buyers can claim a discount and will not be liable for any stamp duty. For properties valued up to £500,000 the buyer will pay 5% tax on the portion of the property value over £300,001. For properties worth over £500,000 the usual rate of stamp duty applies.

Because the rates increase proportionally across the total value of the property, it is complicated to work out the stamp duty payable. This is also the case when buying a leasehold property. If the purchaser owns more than one property higher rates of stamp duty apply, starting at 3% up to £125,000. A conveyancing professional can advise on exact tax liabilities. Individual buyers are advised to look at the government’s online Stamp Duty Land Tax calculator or, for those looking to calculate the differences in stamp duty rates for different types of buyers, with Yopa’s equivalent tool.

Scotland 

In Scotland stamp duty used to be called SDLT, the same as in England. In April 2015 the Scottish Parliament introduced new legislation and it was replaced by the Land and Buildings Transaction Tax (LBTT). Revenue Scotland collects the payments, not HMRC.

Residential property purchases up to £145,000 pay no tax at all. For property exceeding this threshold, tax rates start at 2% up to £250,000. Rates rise incrementally up to 12% where property exceeds £750,000 in value. Just as in England, the different tax rates are chargeable on each proportion of the property up to the total property purchase price.

There are also tax breaks for first-time buyers in Scotland, in line with the average cost of houses in the country. Buyers purchasing properties up to the value of £175,000 do not pay anything. First-time buyers with properties over this threshold pay 2% which rises incrementally up to a maximum of 12% on the additional value. However, the majority of first-time buyers don’t pay any Land and Buildings Transaction Tax at all.

Non-residential properties attract a different rate of tax. Properties purchased under the value of £150,000 pay no tax. Properties between £150,001 – £250,000 pay 1% of the total value. All properties over £250,000 pay 5%.

Owners of more than one property and buy-to-let properties pay LBTT at higher rates with a lower threshold, starting at £40,000.

Wales

In Wales stamp duty is called Land Transaction Tax (LTT). It is payable to HMRC within thirty days of completing the purchase. The financial threshold for paying the tax in Wales is £180,000 for residential properties. It’s slightly less at £150,000 for non-residential land and properties 

For people who own more than one residential property, there are higher rates of tax payable. The Welsh Government provide their own online Land Transaction Tax calculator which is a handy tool for buyers to work out the amount of stamp duty payable.

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