Essential Guides & Advice Stamp Duty: The Essential Guide

Date Published:

06/10/2008

Find out all you need to know about the tax you pay when you buy a house.

By Sarah Jagger

What Is Stamp Duty?

Stamp duty or stamp duty land tax (SDLT), to give it its proper title, is a tax levied when you buy a home. If you’re selling, you don’t have to pay stamp duty on the sale.

When You Have To Pay Stamp Duty

It must be paid on completion of a house purchase. Your solicitor will ask you to complete a land transaction return and will need the funds to cover the duty shortly before the completion date. Your solicitor will then send the money to the Revenue on your behalf.

Why You Have To Pay Stamp Duty

Stamp duty was invented by the Dutch in 1624 and first levied in the UK in 1694 by William and Mary as 'several duties on vellum, parchment and paper for four years, towards carrying on the war against France'. Like income tax, which was introduced to pay for the war against Napoleon, stamp duty proved to be such a nice little earner for the government that it was never repealed.

It was so successful that it remained even when its imposition brought about riots in the American colonies in 1765, most notably what became known as the 'Boston Tea Party'. It was extended during the 18th and 19th centuries to cover newspapers, gold, silver plate - and even hair powder. The tax was extended to property sales in 1808.

Stamp duty is now the oldest tax administered by the Revenue. Research shows that revenues from stamp duty on residential property have risen enormously in recent years. In 1997-98, stamp duty was worth just £830m to the Treasury. The figure has now soared to £6.5bn a year, leaving home owners some £31.5bn worse off over the last 10 years.