Understanding Property Purchase Tax

When you buy property in the UK, you'll pay tax on the purchase. The amount depends on where you buy and your circumstances.

The UK has three different property purchase taxes, and which one applies depends on location. You'll need to pay this tax when you purchase your new property, so it's important you factor in the costs.

Key takeaways

• England and Northern Ireland use Stamp Duty Land Tax (SDLT)
• Wales uses Land Transaction Tax (LTT)
• Scotland uses Land and Buildings Transaction Tax (LBTT)
• Buying before selling your existing home can trigger higher tax rates
• Use official calculators to work out your liability early
• Get professional advice if your situation is complicated

The three tax systems

Stamp Duty Land Tax (SDLT)

Applies in England and Northern Ireland.

GOV.UK (Stamp Duty Land Tax)

Land Transaction Tax (LTT)

Applies in Wales.

GOV.WALES (Land Transaction Tax rates and bands)

Land and Buildings Transaction Tax (LBTT)

Applies in Scotland.

Revenue Scotland (Residential property rates and bands)

The second home trap

Here's what catches people out:

If you buy your new home before selling your old one, you may be treated as owning two properties at the point of purchase. This triggers higher tax rates.

Rules vary by nation, but the principle is the same. You'll pay more tax if you own multiple properties when you complete the purchase.

Important

However, you may be able to get a refund of the extra amount of tax paid if you sell your previous main home within a certain period. If this is something you're considering, speak with a professional adviser.