If you've ever been involved in the purchase of property, or the buying of shares, then you've probably paid stamp duty.
The most common flavours of stamp duty are stamp duty reserve tax and stamp duty land tax.
Basically, stamp duty is a tax which you pay for the processing of the documentation involved in the transaction. And it is calculated as a percentage of the purchase price.
Stamp duty reserve tax involves the purchase of securities (1.5% for bearer instruments) and shares (0.5% of market value). The rates are for 2006/2007.
Stamp duty land tax is paid on the purchase of property and the rate applied depends on its price.
Generally, on property with a value of £125,000, or less, no tax is payable. This figure could be £150,000 in an area designated as disadvantaged.
Stamp duty of 1% is levied on property whose value is between £125,001 and £250,000. Between £250,001 and £500,000, it is 3%.
If the value of the property is over £500,000, the stamp duty rate is 4%.
