Editorial guide
Property tax sounds like one line on a completion statement or an escrow bill, but the UK and US versions tax completely different things at completely different moments — one is a one-off duty on the act of buying, the other a recurring levy on the fact of owning. Confusing the two understates UK upfront cash and overstates US purchase cost, so this guide walks the bands, reliefs and rate variance that actually set the cheque you write.
How UK stamp duty is calculated — the slice rule
SDLT (England and Northern Ireland), LBTT (Scotland) and LTT (Wales) all look like staircases, but they charge by slices, not by cliffs. Each rate applies only to the portion of price that sits inside that band. England in 2025/26 — the model in the calculator — charges:
- £0–125,000 — 0%
- £125,001–250,000 — 2% on that £125k slice (£2,500 max)
- £250,001–925,000 — 5% on that £675k slice
- £925,001–1,500,000 — 10%
- Above £1,500,000 — 12%
A £300,000 purchase therefore pays 0% on £125k + 2% on £125k (£2,500) + 5% on £50k (£2,500) = £5,000 total, effective 1.67%, not 5% on £300,000 (£15,000). The band table in the calculator shows each slice and its tax so you can reconcile to HMRC's own examples. Scotland is kinder at the bottom (0% to £145,000) and Wales is cheaper to £225,000 then jumps harder — £300,000 in Wales pays 6% on £75,000 (£4,500) above the £225k zero band, versus £5,000 in England and £3,100 in Scotland, which is why the region selector matters more than it looks.
Two overlays change the marginal total dramatically. First-time relief in England — 0% to £425,000 and 5% on £425,001–£625,000 when every buyer is first-time, the property is ≤£625,000 and will be a main residence — means £350,000 pays £0, £500,000 pays £3,750 and £625,000 pays £10,000, versus £15,000 at standard bands for £500,000. Above £625,000 the relief vanishes entirely and you revert to standard. Additional-property surcharges are flat on the whole price on top of the slice maths: +5% SDLT in England, +6% LBTT ADS in Scotland (in practice 8% from December 2024 for some cases) and +4% LTT higher rate in Wales. On a £400,000 second home, England bands alone are ~£7,500 but the 5% surcharge adds £20,000 — £27,500 total — which is why toggling “additional” in the calculator often triples the number and dominates deposit affordability.
Duty = Σ slice × rate + (additional ? price × surchargeRate : 0) — with slices marginal and surcharge flat on price
How US property tax is calculated — rate times assessed value
US property tax is simpler at the point of calculation and more variable by location. The formula is one multiplication:
Annual tax = assessed value × mill rate
Assessed value is usually a fraction of market value set by the county assessor (often 80–100% but some states assess lower) and mill rate is the combined levy of county, city, school and special districts expressed as a percent. The calculator uses price as assessed value at the rate you set — a good estimate at purchase, though assessors may reassess annually or on sale. National average is about 1.10% of home price, but the spread is the story: Hawaii ~0.31% ($400k × 0.31% = $1,240/yr, $103/mo), Alabama ~0.40%, California ~0.71% on average (capped by Proposition 13), Texas ~1.60%, Illinois ~2.08%, New Jersey ~2.23% ($400k × 2.23% = $8,920/yr, $743/mo). On the same $400,000 home, carry varies by $640/mo between extremes — enough to change the mortgage you qualify for.
Property tax is usually escrowed: lenders collect one-twelfth each month with the mortgage payment and pay the county twice a year, so you feel it as part of “PITI” but it is not principal or interest. Exemptions reduce taxable value before the rate applies — homestead (often $25–100k of value exempt for a primary residence), senior and veteran exemptions, and caps on annual assessed growth (California 2% cap, Texas 10% cap on homestead). The calculator's insurance and HOA fields sit alongside tax for that reason: $150/mo insurance plus $250/mo HOA plus $367/mo tax at 1.1% is $767/mo of non-mortgage housing fee, and together with P&I the total determines affordability far more than price alone.
Comparison table — same price, different regions and surcharges
The table fixes price at £350,000 to show how region and buyer type move the cheque, and adds a $400,000 US row so the annual vs upfront contrast is visible. Totals are rounded and exclude legal fees.
| Scenario — £350k / $400k | Basis | Duty / tax | Effective rate | Monthly equivalent |
|---|---|---|---|---|
| England standard | SDLT slices | £7,500 | 2.14% | £625/mo |
| England first-time | 0% to £425k relief | £0 | 0.00% | £0/mo |
| England additional | +5% surcharge | £25,000 | 7.14% | £2,083/mo |
| Scotland standard | LBTT slices | £4,850 | 1.39% | £404/mo |
| Wales standard | LTT slices | £5,700 | 1.63% | £475/mo |
| US $400k at 1.10% | Annual levy | $4,400/yr | 1.10% | $367/mo tax |
England £350k standard: 0% on 125k + 2% on 125k (£2,500) + 5% on 100k (£5,000). US monthly excludes insurance/HOA. Monthly equiv. for UK is upfront ÷ 12 for scale comparison.
Three lessons from the same price. First, buyer type beats region: first-time vs additional moves £25k, region moves ~£2.5k. Second, UK upfront vs US annual is not comparable as totals — divide UK upfront by expected holding years to judge carry: £7,500 held five years is £125/mo effective, held two years £313/mo. Third, US variance is geography: a 1% point rate gap is $4,000/yr, so the county you choose is a larger lever than 10% price negotiation.
Using the calculator before an offer
For UK purchases, set price, region and buyer type and note both duty and effective rate; add legal fees (~£1–2k) and removals to get cash needed on completion — price + duty is the number the bank does not lend you. For US purchases, set price and the county's rate (not the state average), add insurance and HOA, and add the monthly total to the mortgage P&I estimate: the sum is PITI+HOA, the figure underwriters test against 28% gross and 35% take-home. In both cases, re-run the calculator at a 5–10% higher price to stress-test: UK duty is marginal, so the extra duty is modest (5% on the excess slice), but the cash jump plus deposit uplift is not; US tax is linear, so a $50k higher price at 1.5% is $62/mo forever, indexed to reassessment.
Methodology and assumptions
- England SDLT model: Marginal 0% to £125k, 2% £125–250k, 5% £250–925k, 10% £925k–1.5M, 12% above. First-time relief: 0% to £425k, 5% £425–625k, only if all buyers first-time, price ≤£625k, main residence; otherwise standard. Additional: standard + 5% × price. We model the surcharge as 5% flat on price per the brief — HMRC's current additional rate is 5% since October 2024.
- Scotland LBTT: 0% to £145k, 2% to £250k, 5% to £325k, 10% to £750k, 12% above. ADS +6% × price if additional (in practice 8% from December 2024 for many cases; the calculator notes the assumption date).
- Wales LTT: 0% to £225k, 6% to £400k, 7.5% to £750k, 10% to £1.5M, 12% above. Higher rate +4% × price if additional.
- US tax: Annual = price × rate/100; monthly = annual/12; total monthly = tax/12 + insurance/12 + HOA (HOA entered as monthly). Price used as assessed value at purchase; caps and exemptions not modeled — check county assessor.
- Equivalents: UK monthly = upfront ÷ 12 and upfront ÷ (holding years × 12) is the planning translation; the page shows ÷12 for scale. Effective rate = duty ÷ price. Cash needed = price + duty. All values rounded to £/ $.
- Excluded: Legal fees, searches, mortgage product fees, VAT on fees, and for US, special assessments, Mello-Roos or HOA capital levies. UK assumes residential main rate; non-residential and mixed-use have different tables.
Thresholds are confirmed statutory schedules. If HM Treasury, Revenue Scotland or the Welsh Revenue Authority update brackets, formulas are adjusted immediately.