This is Money's guide to stamp duty: how much you will have to pay and whether you can avoid it
About stamp duty
Stamp Duty Land Tax was introduced in December 2003 and replaces the old stamp duty on purchases of flats, houses and other land and buildings.
It is a percentage paid on the purchase of a home or non-residential property, graded into bands.
The bands for the tax year 2010/2011 are 0% paid at 0 - £125,000, 1% paid on properties costing between £125,000 and £250,000, 3% between £250,000 and £500,000 and 4% for more than £500,000.
The bands were changed in the 2010 Budget. First-time buyers can secure a two-year temporary stamp duty relief up to £250,000, from 25 March 2010.
A new 5% threshold above £1m was introduced from 6 April 2011.
How stamp duty works
It is paid on the whole value of a property, so if you buy a property costing costing £251,000, you would pay £7,530 not just the amount over the threshold as you would do with income tax. This jump means if your property costs £250,000 you will pay £2,500, if it costs £250,001 you will pay £7500.03.
The sudden leap in bills occurs at each of the thresholds.
›› Stamp duty calculator: work out how much you will have to pay
›› Tables: Check the best mortgage rates
The stamp duty holiday
It was announced that from early September 2008, for a limited period of 12 months, properties worth up to £175,000 were exempt from the charge. This was extended in the 2009 Budget to the end of the year (until 31 December 2009).
In practical terms, it meant a temporary raising of the threshold from £125,000 to £175,000, saving buyers up to £1,750.
A new stamp duty holiday only for first-time buyers was launched in the Budget 2010. This exempts those buying their first home from stamp duty up to £250,000 until 25 March 2012. It only applies to those who have never owned a home before.
›› More on the stamp duty impact debate
Stamp duty changes: can I avoid it?
The changes to stamp duty in 2003 meant that purchasers no longer had to submit documents providing details of the purchase to the Stamp Office for stamping. Instead their solictor, or licensed conveyancer asks them to sign a Land Transaction Return form, which has all the information on.
But the new form was far more complex than the previous document and was designed to crackdown on people claiming to pay more for fixtures and fittings, therefore bringing the cost of the home below a threshold.
Instead of the previous Particulars Delivered form, a single page asking for the names and addresses of parties, location of the property and price paid, the new form introduced was six pages long and has 70 questions. It must be sent to the Inland Revenue, and the Land Registry will not register ownership until it has a certificate from the Revenue that the form has been received.
›› A history of stamp duty
Avoiding stamp duty
The new form was aimed at discouraging homebuyers artificially keeping a price just below the £250,000 threshold by paying that for the home and extra for fixtures and fittings. The new form allows the taxman to scrutinise a sale carefully and investigate it for up to nine months afterwards.
Tax experts said the main target of the change was businesses rather than individuals but any property sold for just under £250,000 with a large sum of fixtures and fittings added on may come under scrutiny.
Calculator: Stamp dutyGuide: Stamp duty thresholds and exemptionsAsk an Expert: How can I dodge stamp duty?Stamp duty and the impact on house pricesOpposition to stamp duty
Due to soaring house prices in previous years and the nature of how it is charged, stamp duty is an unpopular tax.
The slab system was introduced by Gordon Brown, as Chancellor. Before his time in charge of the nation's finances stamp duty was a flat rate of 1% above £60,000. This was changed to 1.5% above £250,000 in 1997 and 2% above £500,000 and then 3% above £250,000 and 4% above £500,000 in 2000.
Since then the higher thresholds have failed to keep pace with rampant house price inflation. Had they done so, the 3% band would start at £694,000 and the 4% band would start at £1,388,000, according to the Nationwide's house price figures.
The threshold was raised by the Government from £60,000 to £120,000, in March 2005, in recognition of the rising cost of housing and its impact on first-time buyers already struggling to get on to the property ladder.
The threshold was raised further to £125,000 in 2006 - roughly in line with annual house price inflation from 2005 - 2006. But experts criticised this small rise claiming the cost of homes being held just below the threshold would simply rise from £120,000 to £125,000 and it would be counter-productive.
Critics have called the tax to be made marginal like income tax, so that you only pay the percentage above a certain level.
We'll let you know if there's a change in stamp duty rules or thresholds: Sign up for a newsletter and newsflash