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Stamp duties are levied on conveyances and transfers of land and property, and on securities (share and bond) transactions. The term comes from the fact that historically stamps on documents, following their presentation to the Stamp Office, indicated payment. Land and property transactions are now charged Stamp Duty Land Tax (SDLT), whereas electronic transfers in securities are charged Stamp Duty Reserve Tax (SDRT). In 2018/19 stamp duties raised £15.6 billion in total; SDLT accounted for just over three quarters of this total (£11.9 billion).[1]

Historically stamp duty land tax (SDLT) has been charged at a single rate on the whole purchase price of a property, with different rates for different value bands. When the sale price of a property exceeded the threshold for a higher rate of duty, tax would be charged on a ‘slab basis’, at the higher rate on the whole value of the sale rather than the part of the price above the threshold.  The tax has been charged at the same rate of tax irrespective of the number of residential properties owned by the buyer. Both of these aspects of the tax have been reformed in recent years.

First, in his Autumn Statement in December 2014 the then Chancellor George Osborne announced that in future SDLT would be charged on residential property on a ‘slice basis’: rates would only apply to the part of a property’s selling price that fell within each value band. New rates and thresholds would be introduced, with effect from 4 December 2014, to ensure that in removing these distortions, most buyers would not have to pay more tax. In addition, as Mr Osborne explained, “anyone who has exchanged contracts but not completed by midnight [on December 3] will be able to choose whether to pay under the old system or the new, so no one in the middle of moving house will lose out.”[2] It was estimated that this reform would cost £395m in 2014/15, rising to £760m in 2015/16.[3] To give effect to these changes the Government introduced primary legislation: the Stamp Duty Land Tax Act 2015.[4]

Second, in his Autumn Statement in December 2015 Mr Osborne announced that from   1 April 2016 new higher rates of SDLT would apply on the purchase of additional residential properties, such as second homes and buy-to-let properties. The Government launched a consultation exercise on how the new rates would apply. In the 2016 Budget the Chancellor announced certain modifications to the Government’s original plans, though the main principle underpinning the new duty regime would remain: the higher rates apply on a purchase if, at the end of the day, the buyer ends up with more than one property, but not if the property purchased is to replace one’s main residence, which is being sold.[5] The new higher rates were forecast to raise £675m in 2016/17, rising to £750m in 2017/18.[6]

Mr Osborne also announced that the structure of SDLT on commercial property would be reformed, so that the tax would be charged on a ‘slice basis’, in the same way as residential property. The Chancellor summarised the impact of the new duty regime as follows: “commercial stamp duty will have a zero rate band on purchases up to £150,000, a 2% rate on the next £100,000, and a 5% top rate above £250,000. There will also be a new 2% rate for those high-value leases with a net present value above £5 million … These reforms raise £500 million a year and while 9% will pay more, more than 90% will see their tax bills cut or stay the same.”[7]

Provision to give effect to both of these changes to the tax was included in the Finance Act 2016 (specifically s128 and s127 of the Act).

In the 2017 Autumn Budget the then Chancellor Philip Hammond announced that for first time buyers, the price at which a property became liable for SDLT would be set at £300,000. The relief would come in with immediate effect but would not apply for purchases of properties worth over £500,000. It was estimated that the new relief would cost £125m in 2017/18, rising to £560m in 2018/19.[8] Provision for the new relief was included in the Finance Act 2018 (specifically s41 of the Act).[9] Subsequently in the 2018 Budget Mr Hammond announced that the relief for first-time buyers would be extended to all ​first-time buyers of shared ownership properties valued up to £500,000. Relief would be retrospective so that first time buyers who had made such a purchase since the previous Budget would benefit.[10]

The Chancellor Rishi Sunak did not announce any major changes to SDLT in the 2020 Budget on 11 March. However, on 8 July the Chancellor gave a statement to the House on the state of the economy in the context of the Covid-19 pandemic, setting out a series of measures to boost job creation. As part of this Mr Sunak announced a temporary increase to the nil rate band (NRB) for residential house sales, from £125,000 to £500,000.[11] The new NRB applies from 8 July 2020 to 31 March 2021, at an estimated Exchequer cost of £3.8bn.[12] Detailed guidance on the new NRB has been published by HMRC.[13]

This paper discusses these reforms to the taxation of residential property, before looking at earlier debates about the way house sales have been taxed. Two other Commons Briefing Papers look at the wider issues of housing need and housing supply.[14]

Guidance on SDLT is collated on This includes an online calculator for those who wish to determine how much duty they are liable to pay, on transactions for both residential and commercial property.

Over this period SDLT has been devolved to both Scotland (from April 2015) and Wales (from April 2018). Both the Scottish and Welsh Governments charge their own replacement taxes: the Land and Buildings Transactions Tax collected by Revenue Scotland; and the Land Transaction Tax collected by the Welsh Revenue Authority. In both cases higher rates of tax are charged where the purchaser already owns a residential property, and in the case of Scotland, tax relief is also provided for first time buyers. Statistics on each of these taxes are published by Revenue Scotland and the Welsh Revenue Authority. In addition the Office for Budget Responsibility publishes statistics on historic receipts and projected revenues from all three of these property transaction taxes. The OBR’s most recent forecast is that in 2020/21 SDLT will raise £12.8 billion, while its Scottish and Welsh equivalents will raise £700m and £300m respectively.[15]

Notes : 

[1]     HM Revenue & Customs, UK Stamp Tax statistics 2018 to 2019, October 2019. HMRC collate statistics on stamp taxes on

[2]     HC Deb 3 December 2014 c316. Further details were given in, HM Treasury, Stamp duty reforms on residential property, 3 December 2014.

[3]     Autumn Statement, Cm 8961, December 2014 pp52-4, p64 (Table 2.1 – item 4).

[4]     HC Deb 4 December 2014 c427, c476. See also, HMRC, Stamp Duty Land Tax: reform of structure, rates and thresholds, December 2014

[5]     HC Deb 16 March 2016 c961. Budget 2016, HC901, March 2016 pp38-9.

[6]     Budget 2016, HC 901, March 2016 p85, p87 (Table 2.1 – item 44; Table 2.2 – item ad). For guidance on the operation of the 3% higher rate see, HMRC, SDLT: higher rates for purchases of additional residential properties, November 2016.

[7]     HC Deb 16 March 2016 cc958-9. Budget 2016, HC901, March 2016 paras 1.179-83 & HMRC, SDLT: reform of charging provisions for non-residential property – tax information & impact note, March 2016.

[8]     HC Deb 22 November 2017 cc1059-60. Autumn Budget 2017, HC 57, November 2017 para 5.28, Table 2.1 – item 5

[9]     For guidance on the coverage of the new relief see, HMRC, Stamp Duty Land Tax: relief for first time buyers, November 2018.

[10]    HC Deb 29 October 2018 cc663-4. This measure was estimated to cost £5m in 2019/20 (Budget 2018, HC 1629, October 2018 p46, Table 2.1 – item 37).

[11]    HC Deb 8 July 2020 c976-7

[12]    HM Treasury, Plan for Jobs, CP261, July 2020 para 2.39; p7 (Table 1).

[13]    HMRC, Stamp Duty Land Tax: temporary reduced rates, 8 July 2020. See also, HMRC, SDLT Manual, para SDLTM00055, retrieved 9 July 2020

[14]    Tackling the under-supply of housing in England, CBP7671, 9 March 2020 & Stimulating housing supply: Government initiatives (England), CBP6416, 20 April 2020.

[15]    OBR, Economic & Fiscal Outlook, CP 230, March 2020 (Table34.3); Supplementary fiscal tables: receipts and other: Table 2.6 Property transactions taxes: Receipts by sector, March 2020

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