SEARCH, INDEX, UPDATES, CONTENTS, INFORMATION, STAMP DUTY
Stamp duty used to apply to all share and property transactions, except that there were ways to avoid paying it in certain circumstances. The rules were changed to implement Stamp Duty Land Tax on property transactions from 1 December 2003.
Stamp Duty (SD) still applies to paper based share transfer transactions. It is calculated on the value of the shares being transferred at 0.5% per £1,000 or part thereof. It is therefore £5 for any transaction with a value less than £1,000, £10 for a transaction of £1,001 etc., except gifts which are exempt if the appropriate certificate is signed on the share transfer form. The Inland Revenue provide a calculator for stamp duty.
Stamp Duty Reserve Tax (SDRT) was introduced in 1986 for paperless share transfer transactions dealt with on the Stock Exchange. It is calculated on the value of the shares being transferred at 0.5% rounded up to the nearest penny. The Inland Revenue also provide a calculator for stamp duty reserve tax.
Stamp Duty Land Tax (SDLT) applies to property transactions from 1 December 2003. It is applied at a fixed percentage dependant on the purchase price.
For most residential property there is no duty up to £60,000 but 1% on transactions up to £250,000 so £600 on £60,001, payable by the purchaser. From £250,001 to £500,000 the rate is 3% so £7,500 on £250,001. Above £500,000 the rate is 4%.
Similar rates apply for commercial property except there is no duty up to £150,000 when the 1% rate applies - £1,500 on £150,001.
Property in disadvantaged areas is exempt from Stamp Duty on sales of up to £150,000 for domestic property and without limit for commercial property. The Inland Revenue website details the rules, including for mixed properties, in a statement of practice, and identifies exempt areas by postcode or Local Authority Council Wards (pdf file for England).
An estimated 8,000 new postcodes are generated in the UK each year, for example when a new development is built. There is a time lag between a new postcode being created and being included on the Revenue website. If you consider your property should be exempt, but is not on the Revenue site, it would be worth checking with the Local Authority Electoral Register.
Leases are also subject to SDLT. This is calculated on the whole of the future rent discounted at 3% per annum. Unlike property purchases the duty is only charged on the excess over £60,000 for most residential property or £150,000 for most commercial property. In disadvantaged areas the residential threshold is increased to £150,000 and commercial leases are exempt.
The Inland Revenue also provide calculators for property, for leases, and a summary of the rates.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 22 July 2004.