STAMP DUTY FREQUENTLY ASKED QUESTIONS

Last updated , by Jay Woods

The following constitute some of the most popular questions online on the subject of Stamp Duty Land Tax.

Some of the preferred answers given by the world's most popular search provider are not exactly up to scratch, so let's see if we can do so much better here...

(As an added bonus, there is also a downloadable version of these FAQs at the bottom of the page).

1. What is stamp duty?

Stamp Duty Land Tax (SDLT) is a self-assessed, compulsory tax payable by buyers (but not sellers), regardless of their country of residence, on most property transactions, residential or non-residential, freehold or leasehold, in England, Northern Ireland, Wales* and, until 1st April 2015, Scotland also (since which date it has been replaced by Land and Buildings Transaction Tax - LBTT).

For further details of Stamp Duty rates and bands, see the 2018 Stamp Duty Rates & Bands page.

* Stamp Duty Land Tax in Wales will be replaced by Land and Buildings Tax (LTT) in April 2018.

Source: The 2018 Glossary of Stamp Duty Terms.


2. How much is stamp duty when buying a house?


SDLT is calculated using a bands-and-rates methodology.

No tax is due on the first £125,000 of a property's price (i.e. on the first band). On the second band (£125,001 - £250,000), stamp duty is charged at 2% of the element of the property's price lying within that band. And so on it goes, as per the relevant bands (which themselves vary depending on the finer details of the property transaction).

Rates and bands are treated in much greater detail on the specialised 2018 Stamp Duty Rates & Bands page.

Note 1: The table below applies to dwellings or land that is deemed residential property.

Note 2: The Full Stamp Duty Calculator allows you to calculate SDLT for a variety of common conditions, not just residential.


Price of property SDLT rate
SDLT rate
(2nd home or BTL)*
up to £125K 0% 3%
£125K+ to £250K 2% 5%
£250K+ to £925K 5% 8%
£925K+ to £1.5M 10% 13%
£1.5M+ 12% 15%

* Second home / buy to let transactions under £40,000 are zero-rated, i.e., no SDLT is due and you do NOT have to file a return.


3. How long do you have to pay stamp duty?


A Stamp Duty Land Tax return for a property transaction must be submitted, along with any payment due, within 30 days of the Effective Date* or you will risk late filing penalties and interest.

Ideally, this should be done online, but that is only possible if you are using a solicitor or agent as your representative; otherwise, you will have to file a paper return - the form for this is called SDLT1 and can be obtained online or by phone.

Payment can be made by:

  • e-transfer (if you have online banking)
  • credit / debit card
  • at your bank / building society
  • at the Post Office (at no charge as long as the SDLT due is less than £10,000)
  • cheque sent by post

Source: Official guidance on how to pay Stamp Duty Land Tax.

* Effective Date: Normally, in the context of SDLT, this will be the Completion Date.

However, it may alternatively be brought forward to the date of "substantial performance", which means one of the following occurs prior to the Completion Date:

  • Most (usually 90%) of the Chargeable Consideration is paid, or,
  • The buyer by some legal means becomes entitled to assume possession of the property, or,
  • The first rent payment (in the case of Leasehold transactions) occurs.

Source: The 2018 Glossary of Stamp Duty Terms.


4. Do you have to pay stamp duty when you sell a house?


No, sellers / vendors of property, whether land or dwellings, are not liable for any Stamp Duty Land Tax (SDLT) or the Scottish equivalent, Land and Buildings Transaction Tax (LBTT). SDLT and LBTT are exclusively paid by property buyers. However, sellers of property will be liable to Capital Gains Tax (CGT) in many instances, unless the property being sold is classified as the seller's main residence.

As an aside, an argument does now exist (most notably enunciated by the Association of Accounting Technicians) for the law to be altered so that the seller, rather than the buyer, will be the party liable to pay SDLT. This would ostensibly make it easier for first time buyers to enter the market, as it would remove the burden of what often is a hefty upfront cost when buying property.

5. Is there stamp duty relief for a first time buyer?


Starting on 22nd November 2017 and announced by the Chancellor during his Budget deliberations, first time buyers of properties of up to £300,000 in most areas will pay no SDLT, and the first £300,000 of purchases worth up to £500,000 in London and other more expensive locales will also be zero rated for SDLT. In the latter case, you will pay 5% on the element of the price between £300,001 to £500,000.

So far, this does not apply to Scotland's LBTT and the position with Wales' forthcoming LTT are not yet determined.

6. What is the premium on a lease?

A lease premium is payment - in cash or something in lieu of cash, such as labour - made to a landlord when a lease is granted.

It is subject to Stamp Duty Land Tax at the rates shown on the 2018 Stamp Duty Rates & Bands page.

Source: The 2018 Glossary of Stamp Duty Terms.


7. What is the stamp duty threshold?


The threshold at which a property transaction becomes liable for Stamp Duty Land Tax (SDLT) or the Scottish equivalent, Land and Buildings Transaction Tax (LBTT), depends on the nature of the transaction. The cases are as follows:

Note 1: Residential leaseholds are almost unknown in Scotland and are accordingly, in all but one special case, not subject to LBTT rules.

Note 2: With new leasehold transactions, the annual rents will also be subject to their own special treatment on the basis of their Net Present Value. For a summary of the NPV bands and rates, see the 2018 Stamp Duty Rates & Bands page.

Note 3: For explanations of terminology, see the 2018 Stamp Duty Glossary.


8. What is Land and Buildings Transaction Tax?

Land and Buildings Transaction Tax (LBTT) is a Scotland-only, self-assessed, compulsory tax due on most property transactions from 1st April 2015 when it wholly replaced Stamp Duty Land Tax (which remains in place in the rest of the UK).

Note: LBTT's rates and bands differ from those of SDLT. For complete tables of the current LBTT rates, see the 2018 Stamp Duty Rates & Bands page.

Source: The 2018 Glossary of Stamp Duty Terms.


9. What is the LBTT due when buying a house?


Like SDLT, LBTT is calculated on the basis of differing rates for bands within a dwelling's total price.

For most standard property transactions, the first £145,000 is zero-rated (i.e. no tax is due); then the amount of the price above £145,000 falling in the next band is multiplied by that band's rate (i.e. by 2% for a standard residential, non-second home property acquisition), and so on.

For full details of rates and bands, see the 2018 Stamp Duty Rates & Bands page.

Note: The table below is for residential property only.


Price of property LBTT rate
LBTT + ADS @ 3%
(for Additional Dwellings)*
up to £145K 0% 3%
£145K+ to £250K 2% 5%
£250K+ to £325K 5% 8%
£325K+ to £750K 10% 13%
£750K+ 12% 15%

* Additional dwelling transactions of less than £40,000 are zero-rated, i.e., no LBTT is due, and there is no requirement to file a return.


10. When do you have to make a return for LBTT?


After you purchase a property in Scotland, you must file a Land and Building Transaction Tax (LBTT) return plus any tax owed within 30 days of the effective date, upon pain of late filing penalties and interest.

It may be done online or via a paper submission.

Payment can be made by:

  • e-transfer (if you have online banking);
  • direct debit;
  • cheque sent by post, made payable to Revenue Scotland.

Source: The official guidance on how to pay LBTT.


11. What is the difference between SDLT and LBTT?


The key difference between SDLT and LBTT is the structuring of the rates and bands which, while modelled on the same core concept, have been tweaked in Scotland with a view to better maximising revenues - in theory - than should be the case had SDLT been in force there.

However, LBTT has come under much criticism of late for being "punitive", and perhaps the graphs below will illuminate the reason why.

The other key differences have to do with residential leasehold transactions, which essentially do not exist in Scotland, and with the way in which Net Present Value on non-residential leases is formulated.

Graph: SDLT and LBTT Comparison (Standard Residential Rates,
Graph: Tax Payable with SDLT versus LBTT

12. What is Land Transaction Tax (LTT) / Welsh Stamp Duty?

Land Transaction Tax (LTT, or more colloquially, Welsh Stamp Duty) will be a Wales-only, self-assessed, compulsory tax due on most property transactions in Wales, from April 2018 when it is due to wholly replace Stamp Duty Land Tax.

Its most notable projected key difference from SDLT would be an exemption for the rental component of new lease transactions (whereas SDLT taxes this via the Net Present Value treatment).

Rates and bands have not yet been settled.

Primary source: Welsh Government Factsheet.

Source: The 2018 Glossary of Stamp Duty Terms.