Stamp Duty in the United Kingdom

Understanding the tax implications of buying/selling property...

Stamp Duty Land Tax (SDLT) is a tax paid by the buyer when a house or land is purchased. It is charged on all purchases of houses, flats and other land and buildings sold for more than £125,000. Under a recent tax break, first-time buyers were exempt from paying Stamp Duty Land Tax on properties which sold for less than £250,000, however this came to an end in March 2012 and first-time buyers are now subject to the same taxes as all other buyers.

The amount of stamp duty that must be paid is dependent on how much the property is worth. For example, buyers purchasing properties between £125,001-250,000 must pay one percent SDLT; for properties between £250,001-500,000 three per cent, and for properties over £500,001 four percent.

How to Pay Stamp Duty Land Tax

It is the buyer's responsibility to complete a land transaction form and pay the SDLT, with the help of a solicitor who normally assists with the purchase of the property. If no solicitor is being used, contact the HMRC for advice.

Stamp Duty on Shares

When shares are bought in the UK a tax must be paid on the transaction. There are two types:

  1. A Stamp Duty Reserve Tax (STRT), paid when the transaction is paperless
  2. A Stamp Duty for Transactions, paid when a stock transfer form is used

Stamp Duty Reserve Tax

When shares are bought through a stockbroker, the transaction is normally done electronically through a system called CREST. The transaction is known as a paperless transaction. If the shares have been given to the shareholder for nothing, no tax is liable.

Stamp duty for transactions

When shares are bought using a stock transfer form, Stamp Duty must be paid, but only after the first £1,000 of shares. The duty is always rounded up to the nearest £5 above. For example, for £1,050 of shares, the tax payable will be £10.

How to pay both types of Stamp Duty

If share transactions are made electronically via CREST, the Stamp Duty Reserve Tax is deducted automatically. In other cases the shareholder must contact the HMRC themselves.

  • For more information: Click here or
  • Contact the HMRC Stamp Taxes helpline, Tel: 0845 603 0135 between 08:30-17:00 Monday to Friday