# How Much Stamp Duty Will I Pay?

One of the questions that mortgage brokers often get asked is, ‘How much stamp duty will I have to pay?

Stamp duty has long been the nuisance of the property purchaser. With removal, solicitors and estate agents’ fees to pay, the additional cost of duty tax can sometimes be a forgotten cost. It is in effect a tax in lump sum form that buyers of properties over a certain price all must pay regardless of their income. As the amount of stamp duty differs for commercial and residential properties, we will look at stamp duty in England, Wales and Northern Ireland on residential property purchases.

To answer the questions How much stamp duty will I have to pay? Lets look at the rates:

Current duty rates are:

Up to £125 = 0%

£125K to £250K = 2%

£250K to £925K = 5%

£925K to £1.5m = 10%

Anything over £1.5m = 12%

These rates of duty tax which came into effect during 2014 have been designed to be a bit fairer than previously as they spread the duty costs across the price band. This however does mean that calculations have become more complicated.

For simplicity, let’s look at the duty for a property priced at £300,000. The value of your new property up to £125,000 is stamp duty free – you will pay no duty tax on that amount. This means that if you buy a property that is under £125,000 (your London mortgage broker will tell you how unlikely this is) you won’t pay any stamp. The portion of your property between the values of £125,000 and £250,000 will collect a stamp tax cost of 2%. In the case of our £300,000 house that will be 2% of £125,000 which is £2,500.

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The portion of your property above the value of £250,000 will collect a 5% duty cost. On your £300,000 house this will be 5% of £50,000 which is coincidentally another £2,500. When you total those costs, you can see that your duty bill for a £300,000 property will be £5,000.

However, it is important to remember that these only apply in England, Wales or Northern Ireland, in Scotland they have Land and Buildings Transaction tax which works in a similar way but would create a slightly lower cost on your £300,000 property.

… And don’t forget that if you will own more than one residential property on completion then you will be subject to an additional 3% banding on the duty.