Stamp duty

Stamp duty is the term used for the tax that you pay on shares or on property. Stamp duty for properties is called Stamp Duty Land Tax and stamp duty when buying shares is called Stamp Duty Reserve Tax.

The stamp duty for properties is paid for on things such as flats, commercial buildings, houses, bungalows and any land you may purchase. You don't have to buy any stamp duty on properties unless the property you are buying is more than £125,000. If the total price is cheaper than this, then you don't pay any stamp duty. If the total price of the property is £125,001 to 250,000 you pay 1% stamp duty of that total price. If the property is £250,001 to £500,000 then you will pay 2% stamp duty. If you are buying a property that is £500,001 and over, you will pay a whopping 4% of that property price.

There are allowances for properties purchased in areas that are considered disadvantaged. A property in these so called disadvantaged areas will pay no stamp duty whatsoever for properties under £150,000. However, this can only be allowed on residential properties and not on commercial properties.

When you are buying shares the stamp duty reserve tax on these shares is 0.5 per cent. You will pay a higher rate of 1.5 per cent should the shares you have bought be transferred into a clearance service or into a depositary receipt scheme. So, if you buy £1000 worth of shares, regardless of the value, you will pay a tax of £5.

The only allowance for the stamp duty on shares is if you are given the shares without having to pay for them. So, if you are given them through your company for working there or as part of a pension; you don't have to pay stamp duty on them.