Stamp duty originated in the 17th century when duty stamps could be purchased and attached to a transactional document to prove that any tax due on the transaction had been paid. Today, tax relating to the purchase of land is known as “Stamp Duty”, or, more correctly Stamp Duty Land Tax (SDLT) for property.
There has in the past been some confusion as to whether the rate bands are applied once on the whole amount or incremental, ie escalating rates on successive portions. The latter is the case, and for the sake of clarity the following is the current banding table for most residential properties in England and Wales:
A property costing up to £125,000 – nil
The portion of the purchase price between £125,000 and £250,000 – 2% (up to £2500)
Plus the portion of the purchase price between £250,000 and £925,000 – 5% (up to £33,750)
Plus the portion of the purchase price between £925,000 and £1.5m – 10% (up to £57,500)
Plus the portion of the purchase price between £250,000 and £925,000 – 5% (up to £36,250)
Plus the portion of the purchase price over £1.5m – 12%
So buyers of a property costing eg £375,000 would pay £8,750 (£0+£2,500+£6,250). You can find an SDLT calculator at http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Please note that if you are buying an investment property or second home, an additional 3% on the purchase price should be applied to any purchase.