Introduction

Stamp duty is payable by the buyer on a freehold purchase.

Land Transaction Tax ('LTT') is payable by the buyer on most residential share transfer transactions. Please see our specific guide on LTT.

Purchases

Current rates are as follows:

Residential
If the value exceeds £50,000 but does not exceed £300,000 £250 for the first £50,000 plus 1.5 % for each £100 (or part)
If the value exceeds £300,000 but does not exceed £500,000 £4,000 for the first £300,000 plus 2 % for each £100 (or part)
If the value exceeds £500,000 but does not exceed £700,000 £8,000 for the first £500,000 plus 3 % for each £100 (or part)
If the value exceeds £700,000 but does not exceed £1,00,000,000 £14,000 for the first £700,000 plus 3.5 % for each £100 (or part)
If the value exceeds £1,000,000 but does not exceed £1,500,000 £24,500 for the first £1,000,000 plus 4.5 % for each £100 (or part)
If the value exceeds £1,500,000 but does not exceed £2,000,000 £47,000 for the first £1,500,000 plus 5.5 % for each £100 (or part)
If the value exceeds £2,000,000 but does not exceed £3,000,000 £74,500 for the first £2,000,000 plus 6.5 % for each £100 (or part)
If the value exceeds £3,000,000 but does not exceed £6,000,000 £139,500 for the first £3,000,000 plus 8.5 % for each £100 (or part)
If the value exceeds £6,000,000 £394,500 for the first £6,000,000 plus 9.5 % for each £100 (or part)

There is an £80 registration fee in all cases and a £20 Jurat's fee for freehold transactions.

The value of the property is assessed, rather than the price, so gifts and transactions for an undervalue will incur stamp duty based on for the open market value of the property. Concessions are available to first time buyers who fit the applicable criteria.

A different scale is used for commercial property:

Commercial
Up to £1,000,000 but under £1,500,000 £22,000 for the first £1,000,000 plus 3.5 % for any additional amount
Over £1,500,000 but under £2,000,000 £39,500 for the first £1,5000,000 plus 4 % for any additional amount
Over £2,000,000 £59,500 for the first £2,000,000 plus 5 % for any additional amount

There is an £80 registration fee in all cases and a £20 Jurat's fee for freehold transactions.

LTT is payable on a share transfer transaction only when the articles of association of the company grant the right of occupation of a dwelling unit so it is not usually payable on a commercial transaction.

Mortgages

Stamp duty and LTT are also payable on any mortgage taken out to finance a purchase. The s tamp duty or LTT rate is 0.5 % plus an £80 registration fee.

Where a borrower is refinancing an existing loan over their sole place of residence, a nominal rate of £80 is payable, plus 0.5 % of any amount in excess of the original amount drawn under the loan.

This does not extend to refinancing of commercial property or investment property, where a discretionary concession has to be sought from the Registrar of Deeds.

Leases

Stamp duty is payable by the tenant on a contract lease, sub-lease or licence to occupy where the lease or licence is for more than 9 years as well as upon the transfer or extension of such agreements.

Predetermined rent reviews fixed by the terms of the lease (or licence) must be factored in to calculating the stamp duty and therefore can be costly to the tenant in more ways than one. Further, premiums and reverse premiums also attract stamp duty.

Stamp duty is calculated by multiplying the rent or licence fee by the number of years of the term, subject to a maximum of 21 years. The applicable rate is currently 0.5 % of the first £100,000 and 0.75 % of the remainder of the quantum of these multiples.

The rent or licence fee used for this calculation must represent the true market value, or else the deemed open market rental will be applied for the purposes of calculating the stamp duty due.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.