Current Stamp Duty Land Tax Rates UK

How much is stamp duty today?

Rates for a single property

You pay stamp duty at these rates if, after buying the property, it is the only residential property you own. You usually pay 3% on top of these rates if you own another residential property.

As of today, January 1, 2024, there are no confirmed plans for further changes to stamp duty in the UK. However, the following points are worth noting:

• Current temporary changes:
  • The existing increased thresholds introduced in September 2022 are temporary and will revert to their previous levels on March 31, 2025. This means:
    • Nil-rate band: Currently at £250,000, it will return to £125,000 after March 2025.
    • First-time buyers’ relief threshold: Currently at £425,000, it will drop back to £300,000.
    • Maximum property value eligible for first-time buyers’ relief: Currently at £625,000, it will revert to £500,000.

The History of Stamp Duty in The UK 

Stamp duty in the United Kingdom has a long and complex history, dating back to the 17th century. It is a tax levied on various documents, transactions, and assets. Here’s an overview of the history of stamp duty in the UK

The first “Stamped” duty started in the 17th century in June 1694, however, there were duties paid from May 1671 without the embossed stamps.

1. Origins in the War with France: Stamp duty was introduced in England in 1694 during the reign of William III. It was initially implemented to generate revenue for financing the war against France, known as the Nine Years’ War (1688-1697). The tax was a way to cover the war’s substantial costs.
2. Tax on Legal Documents: In its early days, stamp duty targeted legal documents such as deeds, agreements, and contracts. The tax was imposed based on the number of sheets of paper used and the value of the transaction. The presence of a physical stamp on the document was proof of payment.
3. Paper, Not Ink: The name “stamp duty” might suggest that the tax was related to the ink stamp, but it was based on the stamped paper used for these documents. The government required certain documents to be printed on specially stamped paper, and the duty was paid by purchasing this paper.
4. Expanding Tax Base: While initially focused on legal documents, stamp duty gradually expanded to cover a broader range of items and transactions over the centuries. This expansion was driven by the government’s revenue needs and desire to tax various economic activities.
5. Revenue Generator: Stamp duty proved to be a reliable source of revenue for the British government, and it was used not only during wartime but also during peacetime to finance various government expenses. Over time, it became one of the state’s significant income sources.
6. Changing Rates and Exemptions: The rates and exemptions of stamp duty were adjusted periodically to suit the government’s fiscal needs. Different documents and transactions were subject to varying rates, and exemptions were often introduced or removed based on policy changes.
7. Public Resistance: Like many taxes, stamp duty faced resistance and evasion from the public. People sometimes tried to avoid or evade the tax by using unstamped paper or engaging in fraudulent practices. The government responded with measures to combat tax evasion.

Stamp Duty In The 18th Century 

1. Tax on Various Commodities: In the 18th century, stamp duty was not limited to legal documents but extended to a wide range of everyday commodities. This included taxes on newspapers, pamphlets, playing cards, dice, and even hats. These taxes were often seen as a way to generate revenue while regulating and controlling certain activities.
2. Taxation of Newspapers and Pamphlets: One notable aspect of stamp duty in the 18th century was its impact on the press. Newspapers and pamphlets became subject to the tax, which had significant implications for disseminating information and the growth of journalism. Publishers had to pay a tax on each copy printed, which could increase the cost of newspapers and limit their circulation.
3. Playing Cards and Dice: The tax on playing cards and dice was aimed at raising revenue and discouraging gambling, which was considered a social ill at the time. People had to purchase specially stamped playing cards, and dice games were subject to taxation. This was seen as a way to control vices associated with gambling.
4. Tax Evasion and Smuggling: Just as in the 17th century, the 18th century saw attempts to evade stamp duty. People used various strategies to avoid paying the tax, including smuggling untaxed goods. The government responded by implementing measures to combat tax evasion, sometimes leading to crackdowns and enforcement actions.
5. Role in Government Revenue: Stamp duty remained an important source of government revenue throughout the 18th century. It was used to fund various government expenses, including military campaigns, public infrastructure, and administrative costs. The revenue generated from stamp duty helped support the government’s functions during this period.
6. Impact on Society and Commerce: The widespread application of stamp duty significantly impacted society and commerce in the 18th century. It influenced the cost of goods and services, the accessibility of printed materials, and the behaviour of individuals engaging in taxable activities, such as gambling and publishing.
7. Legislative Changes: The 18th century saw changes in stamp duty rates and regulations. Parliament periodically adjusted the rates and expanded or contracted the scope of taxable items based on fiscal needs and policy goals.

19th Century: 

Stamp duty underwent significant changes during the 19th Century. In 1808, a tax on newspapers and pamphlets was repealed, but stamp duty on other documents remained in place. The tax was used to fund the British government’s expenditures during this period, including the Napoleonic Wars.

20th Century: 

In the 20th Century, stamp duty continued to evolve. It was applied to various financial transactions, including stock transfers. During World War I, stamp duty rates were increased to help finance the war effort. After the war, some of these higher rates were retained.

1950s and 1960s: 

The Finance Act of 1958 introduced significant reforms to stamp duty, including exemptions for particular transactions, such as gifts between family members. In the 1960s, stamp duty on share transactions was substantially reduced.

1980s and 1990s:

In the 1980s and 1990s, stamp duty saw further reforms and changes. Stamp duty on residential property transactions was introduced in 1986, and it has since become a major source of revenue for the UK government. Rates for different property values have been adjusted multiple times over the years.

21st Century: 

Stamp duty continued to be a significant revenue source for the UK government in the 21st Century. In 2003, stamp duty land tax (SDLT) replaced stamp duty on property transactions, and in 2014, a new SDLT structure was introduced, introducing a progressive rate system.

Lockdowns and The Effect On The Housing Market

(needs a reference to the prices of houses around this period)

STAMP DUTY HOLIDAY 2020

On the 8th July 2020 the Chancellor, Rishi Sunak, announced an increase for the zero threshold on the payment of stamp duty in England and Northern Ireland in an attempt to help kick start the flagging housing economy post-lockdown.  But did it work and will it last?

The Details

The payment of stamp duty threshold was raised from £125,000 to £500,000 on all properties in England and Northern Ireland; meaning that no duty will be payable up to this amount.  Above this level tax will be at a graduated rate starting at 5%, rising to 10% between £925,001 and £1.5million, and 12% above £1,500,000.  Second home purchasers will also see some benefit, with a reduced stamp duty of 3% on second home purchases up to £500,000.  The ‘holiday’ will last until March 2021 and could save house buyers up to £15,000 on a purchase price of £500,000.

Did It Work 

It certainly seems to have had the desired effect as house sales have rocketed and property values increased following the Chancellor’s announcement.  With summer a traditionally slow time in the housing market when people focus on their own holidays, it would seem that this year only the stamp duty is on holiday and everyone else is staying put and moving house.

According to the property platform, Rightmove, they have seen the busiest month for agreed sales in the last ten years, up 60% on 2019, as well as the highest number of properties coming to the market since March 2008.  

This is across all sectors and prices and Miles Shipside, Rightmove director and housing market analyst comments, “Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown….. The out-of-city exodus has helped push prices to record levels in Devon and Cornwall, for example, where working from home means a different lifestyle much closer to your new doorstep.” (source)

The Future Of Stamp Land Tax Duty (2021)

Following the budget last Wednesday, an extension to the Stamp Duty holiday was announced. It will continue for a further three months, until the end of June 2021. This will enable buyers more time to complete their sales and potentially save up to £15,000 on Stamp Duty Land Tax.

In order to prevent the ‘cliff edge’ scenario, a tapered scheme will come into effect until the end of September 2021; for properties up to the value of £250,000.  After this, the duty will return to the original threshold of £125,000.

Approximately three quarters of a million house purchasers will have saved themselves the tax by the end of the scheme. This has prompted a small, short term property boom.

According to Zoopla, the majority of these purchases were under £500,000. Therefore, no Stamp Duty will have been payable, saving an average of £4,660 per sale, or a collective £2.8 billion.

The Centre for Policy Studies (CPS) is calling on the Government to either permanently increase the stamp duty threshold to £500,000 (at a cost of £3 billion to the Government) or abolish it altogether. The latter is a highly unlikely scenario!

But for many, the continuation of the stamp duty holiday, along with the anticipated introduction of the 95% mortgage scheme, should help to provide a lifeline for the housing market. It is expected this will keep property prices buoyant in the short to medium term.

Stamp Duty Holiday Rush 2021

Solicitors In Demand

We have heard of solicitors advising they cannot take on any more work due to being at breaking point.

As a result, there has been an enormous increase in costs to the buyer created by the huge demand over supply.

Homeowners have saved on average £11,566 in stamp duty since the holiday was introduced last July. According to Halifax, the rush to get a property completed by 30th June 2021 has led to a huge workload for conveyancing firms and a massive hike in fees.  However, buyers seem to be prepared to pay to ensure their sale is top of the list and will make the deadline.

Removal Firms Cashing In 

A client of ours told us they phoned 29 removal firms and were quoted four times the normal price for moving house at the end of this month, but had no choice but to accept it!

Many removal firms are not accepting work unless exchange has already taken place. This has led to disreputable firms cashing in on the demand. There is no requirement for firms to be registered with the British Association of Removers (BAR).

Effectively anybody with a van can call themselves a remover but such companies often have no insurance. They are also likely to leave you high and dry if they get an offer for a more lucrative job; not to mention the risk of damage and stolen goods!

Surveyors

Surveyors are similarly charging any fee they choose for full building surveys. Mortgages are also taking longer from ‘in principle’ to ‘formal’ offer.

Stamp Duty 2024 and Beyond

The future of stamp duty in the UK is still being determined. The current temporary increase in SDLT thresholds is set to expire on 31 March 2025, but it is possible that the government could extend or make permanent these changes.(source)

Many factors could influence the government’s decision on stamp duty in the future, including:

• The state of the UK economy
• The performance of the housing market
• The government’s fiscal position
• Public opinion on stamp duty

Some experts believe that the government will likely extend the temporary increase in SDLT thresholds or even abolish the tax altogether. This is because the government is keen to support the housing market and make it easier for people to buy homes.

Other experts believe the government will likely raise SDLT thresholds in the future but not abolish the tax altogether. This is because stamp duty is a significant source of revenue for the government.

The Future

The government could also introduce new or reformed stamp duty measures. For example, the government could consider introducing a regional stamp duty system or a stamp duty holiday for first-time buyers.

Overall, the future of stamp duty in the UK is uncertain. However, the government will likely change the tax in the coming years.

Here are some specific predictions from experts:

• The Institute for Fiscal Studies (IFS) predicts that the government is likely to extend the temporary increase in SDLT thresholds beyond 2025. (source)
• The Resolution Foundation predicts that the government is likely to increase SDLT thresholds for first-time buyers in the future. (source)

These are just predictions, and the government could ultimately decide to take a different approach to stamp duty in the future.

References 

Stamp Act 1712

Residential Property Rates

FAQ’s Stamp Duty