Stamp Duty Land Tax

What is Stamp Duty?

Stamp duty or Stamp Duty Land Tax (SDLT) as it is formally known as, is a tax charged on all land and property transactions in the UK. Anyone buying a property or land will pay a tax rate depending on the purchase price and the property type.

The Old Stamp Duty

The previous Stamp Duty, known as the slab system, is charged on the ENTIRE purchase price. This meant that there were sudden increases in stamp duty once the price went above the next threshold. The Stamp Duty reform now means that 98% of homeowners in England and Wales pay less and only transactions worth more than £937,000 will pay more in tax.

Purchase Price Stamp Duty Rate
Up to £125,000 0%
£125,000 – £250,000 1%
£250,000 – £500,0000 3%
Over £500,000 4%


Under the old system, if you purchased a property for £250,000 you would have been charged 1% in Stamp Duty which equates to £2,500. However, if the price was £1 more, the stamp duty rate of 3% would have been charged on the total purchase price, an extra £5,000 which totals a bill of £7,500!

How the new Stamp Duty is different

The new and reformed Stamp Duty is now more progressive, and will only apply to the amount of the purchase price that falls within the particular duty band. This means, you will only pay the rate for the proportion of the property that is above the threshold. It is similar to income tax, and although the percentage rates appear higher on some tax bands, the overall charge will mostly be lower.

New Stamp Duty Rates

Purchase Price Stamp Duty Rate
Up to £125,000 0%
£125,000 – £250,000 2%
£250,000 – £925,0000 5%
£925,000 – £1,500,000 10%
Over £1,500,000 12%


Under the new system, we’ll use the same example as before. If you purchased a property for £250,000 you pay nothing for the first £125,000, however a 2% rate will be charged between £125,000 and £250,000 which equates to £2,500.

If you buy a property for £300,000, the 5% will only apply to the difference between £250,000 and £300,000. This 5% equates to a bill of £2,500, plus the previous 2% rate, for a total bill of £5,000

Why do we have to pay it?

When you buy a property, the change in land ownership has to be legally registered at the Land Registry. This process requires a certificate from HMRC – which will only be issued on receipt of the Stamp Duty Land Tax due on the purchase of the property. So, if you don’t pay the Stamp Duty, you can’t buy your new home.

Luckily, that’s one of the things your solicitor takes care of so you don’t have to!