/ Mortgages

A brief history of Stamp duty in the UK

So how did Stamp duty come about?

Stamp duty was born in 1694, It was used as a means to finance the war against France. The plan was for it to last 4years but fast forward to 2017 and it is still present.
At this point, the lowest SDLT band was £60,000, meaning anyone purchasing a property over this amount was required to pay the tax. However, in 2005 this was raised to £120,000, increasing to £125,000 the following year.

So what’s wrong with the Stamp duty land tax?

Although tax breaks have been put in place to assist first time buyers, the stamp duty brackets are not reviewed regularly in line with rising house prices and income. This ofcourse leaves families struggling to move up the housing ladder.

History of Stamp Duty Taxes

Although the history of stamp duty goes back to the 1600s the current system for house purchases was largely introduced in the 1950s. Below are the historic rates and property threshold limits for homes in the UK.

The Stamp duty tax was extended to property sales in 1808 and its present day history goes something like this:

Historical Rates of stamp duty in the UK

The changes are effective from the date shown.

13th March 1984

The following rates covered years 1984, 1985, 1986, 1987, 1988, 1989, 1990, and 1991.

Rate &Charge Band

0%
Up to £30,000
1%
Over £30,000

20th December 1991

As the country went into recession Chancellor Nigel Lawson increased stamp duty bracket and push demand for properties.

Rate & Charge Band

0%
Up to £250,000
1%
Over £250,000

20th August 1992

Those rates were then put back to initial figures as demand picked up.

Rate & Charge Band

0%
Up to £30,000
1%
Over £30,000

16th March 1993

The basic threshold was then doubled again to stay in line with rising house prices.

Rate & Charge Band

0%
Up to £60,000
1%
Over £60,000

Fast forward to 17th March 2005

The base threshold was then doubled again to avoid pricing out first time buyers from the property ladder.

Rate & Charge Band

0%
Up to £120,000
1%
Over £120,000 and under £250,000
3%
Over £250,000 and under £500,000
4%
Over £500,000

Rates from 25th March 2010

To again further assist first time buyers and keep up with the property ladder, the rates were introduced as 0% for properties up to £250,000 and other bands remaining the same.

Rates from April 2010

A new rate is introduced for homes over £1,000,000. up to 31st December 2011.

Rate & Charge Band

0%
Up to £125,000
1%
Over £125,000 and under £250,000
3%
Over £250,000 and under £500,000
4%
Over £500,000 and under £1,000,000
5%
Over £1,000,000

Rates from 1st January 2012

The first time buyer rate is taken away.

Stamp Duty structure changes- Structure from 3rd December 2014

Stamp duty is now only payable on the portion of value of the bracket it falls into. Effectively, the first £125,000 of a property purchase is completely free of tax. The next £125,000 is payable at 2% (or £2,500) etc.

Rate & Charge Band

0%
Up to £125,000
2%
Over £125,000 and under £250,000
5%
Over £250,000 and under £925,000
10%
Over £925,000 and under £1,500,000
12%
Over £1,500,000

The stamp duty as of today.

The latest budget now exempts first time buyers from paying a stamp duty land tax on any property worth up to £300,000 and then 5% on properties worth £300,001 up to £500,000.

How do you pay your stamp duty?

Once you have completed on your home purchase, your solicitor will complete your stamp duty land return and submit it to HMRC within 30 days. You will typically pay your stamp duty on the property price but it can also be based on the total cost to you for obtaining the property e.g estate agents cost. This includes any purchase of the contents of the building except it falls below £100.

You may also be liable for Stamp duty land tax if you are receiving shares of a property even without exchanging any money. Always consult your solicitor on the matter and seek legal advice if necessary

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A brief history of Stamp duty in the UK
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