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In the UK when you buy a property you have to pay a certain amount in stamp duty. The way in which stamp duty is calculated works a little like income tax meaning that you pay the rate of tax on the part of the purchase price within each stamp duty tax band.
As of April 1st 2016 the stamp duty levels increased for investors purchasing buy-to-let property and other second properties, such as holiday homes, in which owners do not intend to live full-time. Here are some examples:
Stamp duty tax bands - main residence
PURCHASE PRICE UNDER £125,000
No stamp duty is charged on properties under £125,000.
PURCHASE PRICE BETWEEN £125,001 AND £250,000
Buyers don’t pay stamp duty on the first £125,000, however they pay 2% on the remainder of the property price.
PURCHASE PRICE BETWEEN £250,001 AND £925,000
Buyers don’t pay stamp duty on the first £125,000; they pay 2% on the portion of the price between £125,001 and £250,000; then they pay 5% on the portion of the price over £250,001.
PURCHASE PRICE OVER £925,000
Buyers don’t pay stamp duty on the first £125,000; they pay 2% on the portion of the price between £125,001 and £250,000; then they pay 5% on the portion of the price between £250,001 and £925,000; 10% on the portion between £925,001 and £1.5 million; and 12% on the portion over £1.5 million.