# How much stamp duty will I pay?

One of the questions mortgage brokers are often asked is, “How much stamp duty do I have to pay?

Stamp duty has long been a real estate buyer’s annoyance. With the relocation, attorney and real estate agent fees to be paid, the additional cost of customs tax can sometimes be a forgotten expense. It is effectively a flat tax that buyers of properties above a certain price must pay regardless of their income. As the level of stamp duty differs between commercial and residential property, we shall look at stamp duty in England, Wales and Northern Ireland on the purchase of residential property.

To answer the questions How much stamp duty do I have to pay? Let’s look at the prices:

The current duty rates are:

Up to £125 = 0%

£125,000 to £250,000 = 2%

£250,000 to £925,000 = 5%

£925,000 to £1.5m = 10%

Anything over £1.5m = 12%

These tariffs, which came into force in 2014, were designed to be somewhat fairer than before, as they spread the tariff costs across the price range. However, this means that the calculations have become more complicated.

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

A 5% Customs Duty will apply to the part of your property valued in excess of £250,000. For your £300,000 house, this is 5% of £50,000, which happens to be another £2,500. If you add these costs together you can see that for a £300,000 property your customs bill is £5,000.

However it is important to remember that these only apply in England, Wales or Northern Ireland, in Scotland there is a land and building transaction tax which works in a similar way but at a slightly lower cost to your property of £300,000 would.

… And don’t forget that if you own more than one residential property after completion, you will be subject to an additional 3% graduated tax.