What is a 'Stamp Duty'

A stamp duty is the tax placed on legal documents, usually in the transfer of assets or property.


Stamp duties, where enforced, were placed on the transfer of homes, buildings, copyrights, land, patents and securities, as well as military commissions and marriage licenses. The stamp duty is also referred to as a stamp tax.

Stamp duties were thought to originate in Spain in the early 17th century, and was introduced throughout Europe over the next century, in the Netherlands, France, Denmark, Prussia, and England. 

Americans will remember that the stamp duty was initiated when the Stamp Act of the British Parliament was passed in 1765. The tax was imposed on American colonists who were required to pay tax on all printed paper, for example licenses, newspapers, a ship's papers or legal documents. At the time, funds collected from stamp duties were used to pay for positioning troops in certain locations of America.

While the United States formerly imposed stamp taxes on various transactional documents, today, there is no federal stamp tax. Only states impose stamp taxes in the United States. 

History of Stamp Duties

Before income and consumption taxes were a substantial tax base, governments raised revenue through property taxes, import duties and stamp duties on financial transactions. As income and consumption have grown, though, it might have made sense to do away with stamp duties. So, then, why do we have them?

Today, typically, stamp duties apply to far less than the broad category of 'financial transactions'. They do remain on properties, though. They are levied when real estate is transferred or sold, and, additionally, many states levy taxes on mortgages and other instruments securing loans against real estate. Stamp duties are kept in place as a reasonable revenue stream for the state, through taxes, and to keep people from speculative investments in real estate. 

Stamp Duties in the News

In recent news, in late 2017, Britain abolished the stamp duty on homes up to £300,000, and stated that for properties up to £500,000, no stamp duty would be paid on the first £300,000. This has led significant cuts in stamp duties for 95% of first time home buyers, with 80% paying no stamp duties whatsoever. And according to the British government, it means savings of up to £5,000 for first-time buyers. The tax break came as the Conservative party attempted to address a rather stark housing crisis in the UK. The Labour Party criticized the measure at the time, as a half-measure, that wouldn't keep houses affordable, but would instead drive the price up. 

  1. Stamp Duty Land Tax (SDLT)

    Stamp Duty Land Tax (SDLT) is the tax imposed by the UK Government ...
  2. Duty Free

    Goods that international travelers can purchase without paying ...
  3. Bingo Card Program

    A motor vehicle registration method that required the operator ...
  4. Securities Transfer Association ...

    A verification system used by many different institutions to ...
  5. Revenue Officer

    An individual who collects revenues such as taxes and duties ...
  6. Revenue Act Of 1862

    This act increased taxes and implemented the first federal income ...
Related Articles
  1. Managing Wealth

    6 Major Collectibles Payoffs

    From comics to records these rare items scored unbeatable returns for those who were able to recognize their value.
  2. Financial Advisor

    Identifying a Breach of Fiduciary Duty

    Pension fund managers are not the only entities owing a fiduciary duty to stockholders. Corporate officers and directors have key fiduciary roles.
  3. Insights

    Should Congress Limit Food Stamp Purchases?

    If Congress limits using food stamps on junk food like candy and soda, manufacturers stand to lose at least some of $1.2 billion in spending.
  4. Investing

    Alibaba Takes Down Fake Cigarette Tax Stamp Ads

    Alibaba answered a call from the Philippine government to take down fake cigarette tax stamp ads.
  5. Personal Finance

    Tax Issues Transitioning Service Members Should Know

    Transitioning military personnel and their families face significant impacts to their tax situation. Here are nine things to consider.
  6. Investing

    How to Finance Foreign Real Estate

    If you don't pay cash, financing real estate abroad is likely to cost more than at home. Watch for local laws and be sure your rights are protected.
  7. Taxes

    3 Ways Tax Haven Governments Make Money

    If the governments of tax haven countries impose little, or no, income taxes, how exactly do these nations generate revenue?
  8. Insights

    A Concise History Of Changes In U.S. Tax Law

    We look at how U.S. taxes have changed since their inception.
  9. Investing

    A Look At National Debt And Government Bonds

    Learn the functions of the U.S. Treasury, and find out how and why it issues debt.
  1. What are the legal regulations on delivery duty paid?

    Understand the legal requirements for delivery duty paid, as well as how responsibilities can shift between buyers and sellers ... Read Answer >>
  2. Why is fiduciary duty so important?

    Find out why fiduciary duty is so important, including what this legal obligation entails and an example of how it can affect ... Read Answer >>
  3. Why do financial advisors have a fiduciary responsibility?

    Find out why financial advisors have a fiduciary duty to their clients, including what fiduciary duty entails and an example ... Read Answer >>
  4. What does a Chief Financial Officer (CFO) do?

    A chief financial officer (CFO) is responsible for accurate reporting of a company's financial information, investing the ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center