Stamp Duty Land Tax (SDLT) is a tax that has to be paid on properties purchased over a certain price. It is not a fixed tax and is dependent on the value of the property.
A property will not be taxed at all until it costs £125,001-£250,000. Everything in this margin is then charged at a rate of 2%. So a property priced at £125,100 will cost a tax of £2 (because the £100 inside the margin will be taxed at 2%).
If the property costs over £250,000 and under £925,000, the tax rate increases to 5%. However, this tax rate will only apply to this £250k-£925k margin, and must be paid in addition to the 2% tax paid on the previous £125,001-£250,000 margin.
The margins keep increasing until the property costs over £1.5m (see table below for full margins and associated tax rates).
|Property Value Margins||Stamp Duty Land Tax Rate|
|£0 – £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,001 – £1.5m||10%|
|Stamp Duty Rates Updated – Dec 2014|
This system was brought in to address an imbalance in the old ‘slab system’, where a property costing just one pound into the next margin up could cost the homebuyer additional thousands of pounds more in tax. This new system is graduated so that those with larger, more expensive properties pay relatively more than those who can only afford smaller, cheaper homes.