Advertisement

Stamp duty

Stamp duty is a re-registration tax. That means you pay it whenever you buy (but not sell) a registered asset.

Stamp duty is a tax incurred when you buy (but not sell) a registered asset. The most common examples are property (the buyer's name has to be recorded at the Land Registry) and shares (the relevant company share register has to be updated).

Originally, stamp duty was justified as the government's way of recouping the cost of the re-registration of property. However, given that this all now takes place digitally, that logic has disappeared in short, it's just a tax, pure and simple.

Advertisement - Article continues below

The rates at which the tax is paid vary. On shares in the UK, it is 0.5% of the purchase price.On property, on the other hand, the rate varies according to value and the buyer's situation. This rate is also fiddled with a lot more regularly by politicians.

Currently, for house values of up to £125,000 the rate is zero, up to £250,000 it's 2%, up to £925,000 it's 5%, up to £1.5m it's 10%, and over that it's 12%. These days, you pay stamp duty on the increasing portions of the property price above £125,000, rather than on the whole price (which used to be the case). The rates are higher if you're buying a second home an extra 3% surcharge applies.

There are also different rules if you're buying your first home if the purchase price is £300,000 or lower, you don't pay stamp duty; or if it's up to £500,000, you'll pay stamp duty of 2% on any amount above £300,000.

Advertisement
Advertisement

Recommended

Visit/glossary/601570/real-exchange-rate
Glossary

Real exchange rate

The real exchange rate between two currencies combines the nominal exchange rate with the ratio of the price of goods or services in two different cou…
26 Jun 2020
Visit/glossary/esg-investing
Glossary

ESG investing

ESG stands for environmental, social and corporate governance, the areas in which good behaviour is particularly sought.
19 Jun 2020
Visit/glossary/601496/faang-stocks
Glossary

FAANG stocks

The acronym FAANG refers to Facebook, Amazon, Apple, Netflix and Google (Alphabet) – five American companies that have been among the top-performing s…
12 Jun 2020
Visit/glossary/technical-analysis
Glossary

Technical analysis

Technical analysts or 'chartists' attempt to predict future share price (or index) movements by looking at past movements.
5 Jun 2020

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020