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Ten facts you might not know about Stamp Duty

Stamp Duty is back in the headlines, but do you really know what it is?

The Stamp Duty Land Tax is charged on both property and land purchases in the UK. The amount you pay depends on the value of your property, starting on anything over £125,000. It used to jump up in bands and be charged on the total value, but now the increases only apply to the part of property within each band.

Minimum property purchase price Maximum property purchase price Stamp Duty rate (only applies only to that part of the property price that falls within each band)
£0 £125,000 0%
£125,001 £250,000 2%
£250,001 £925,000 5%
£925,001 £1.5 million 10%
Over £1.5 million   12%

You may think that’s all there is to know, but here are 10 facts about stamp duty.

1.

A stamp duty is literally the charge to have a document marked with an official and legal stamp.

2.

It’s thought to have started in Roman times, but the modern version comes from the Netherlands in 1624. It held a competition to find a new form of tax, and stamp duty was the winning idea.

3.

Stamp Duty was introduced to the UK in 1694 and is the oldest tax still collected by the Inland Revenue. In the past it’s been charged on items as diverse as cheques, newspapers, hats and insurance policies.

4.

Nowadays you pay it on the land and property purchases. It’s only the bricks and mortar of the property that you are taxed on, so if you are paying more for fixtures and fittings, or any white goods or items of furniture they are exempt.

5.

You also pay stamp duty when you buy shares valued at more than £1,000, though it’s a different system to property, and the rates are different too.

6.

When the British Empire tried to introduce stamp duty to its colonies in the Americas in 1765, it was met with calls of “no taxation without representation” and protests on the streets. It was quickly axed but many see that moment as the start of the American independence movement.

7.

You don’t pay it on properties in Scotland. Instead you have a Land and Buildings Transaction Tax on properties costing more than £145,000.

8.

Just because your property is under £125,000, it doesn’t mean you can ignore Stamp Duty. You still have to submit a Stamp Duty Land Tax return.

9.

Even though your solicitor will usually deal with it, it’s your responsibility to make sure the return and payment are sent on time. If it’s late you’ll pay a £100 penalty, plus any interest.

10.

If you are transferring a portion of your home to an ex-partner after divorce or separation, or if you are giving the deeds of your home to someone – as a gift or in your will - you don’t have to pay Stamp Duty.

 

 

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  • Brian Crews / 7 February

    I am disappointed I have spent nearly an hour on a money advice chat line asking this question
    My wife and I own a mortgage free property valued at £650,000 We both being over 80 are contemplating buying a leasehold sheltered home property for £350,000 I know that if we sell our house the Stamp duty on the purchase will be £7,500 But we are considering retaining our property raising a loan on it to meet the part of the purchase price we cannot meet from other saving and letting out our present property. I understand that will mean we need to pay a higher stamp duty. Can you tell me how much that will be? I would like an answer

  • John Bacon / 16 May 2016

    If they could measure breathing there'd be an oxygen tax.