A guide to stamp duty in 2023

Mar 21, 2023 | Business, Tax

You may know about stamp duty, but what does it mean for you? Has it changed in the last few years? And how can you benefit from the recent changes?

Stamp duty has a long history. It was first introduced back in 1694 and gets its name from the physical stamp required when sending certain documents at the time.

Today, it shares little similarity to the traditional tax form and largely applies as a tax on property purchases.

Stamp Duty Land Tax (SDLT), the version of the tax that applies in England and Northern Ireland, was introduced in 2003 and is payable when you buy property above a certain market value.

You need to pay this tax when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment: for example, you take on a mortgage or buy a share in a house

In this blog, we’ll guide you on what stamp duty means in 2023 and help you understand how it works.


Current rates of stamp duty

The current rates of stamp duty for property purchases in England and Northern Ireland were updated as of the 23rd September 2022.

The tax-free rates are among the few things that survived former chancellor Kwasi Kwartengs infamous ‘mini-budget’.

Making use of the 0% rate means no tax on the first portion of a new house purchase – something that is particularly attractive to a first-time buyer.

Property Price SDLT Rate
Up to £250,000 0%
The portion between £250,001 to £925,000 5%
The portion between £925,001 to £1,500,000 10%
The portion over £1,500,001 12%

Please note:

  • First-time buyers pay no SDLT on purchases up to £425,000
  • First-time buyers pay 5% SDLT on the portion from £425,001 to £625,000
  • Second home purchases attract a 3% premium for valuations over £40,000

For example, if you buy your first house for £825,000, you would pay £28,750 in SDLT.


Stamp duty on non-residential and mixed land and property

You pay SDLT on increasing portions of the property price (or ‘consideration’) when you pay £150,000 or more for non-residential or mixed land or property.

For most transactions under £150,000, an SDLT return is still required.

Non-residential property includes:

  • commercial property eg shops or offices
  • uninhabitable property that is not suitable to be lived in
  • forests
  • agricultural land that is part of a working farm or used for agricultural reasons
  • any other land or property that is not part of a dwelling’s garden or grounds
  • 6 or more residential properties bought in a single transaction

You pay residential SDLT rates on agricultural land if it is sold as part of the garden or grounds of a dwelling.

For example, if a farm of fields had a cottage situated on the grounds.

A ‘mixed’ property has residential and non-residential elements.

For example, a flat connected to a shop, doctor’s surgery or office.


Stay informed

If you are unsure, it is best to talk to an expert. But if you are looking for an answer quickly, we would recommend using the Government’s SDLT calculator to determine how much tax you will pay on your purchase.

SDLT can be subject to change – over the past few years, it has seen major and minor adjustments from the Government. It always pays to stay as up to date as you can.

To talk to us about property, SDLT or your business, get in touch with us here.

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