If you purchase a home in England or Northern Ireland, you may have to pay Stamp Duty Land Tax (SDLT). Depending on how much the property is worth, this could amount to thousands of pounds, so it’s worth knowing in advance how much you will need to pay so you can plan your finances. Read on to find out more about Stamp Duty.
Who pays Stamp Duty and how much is it?
Depending on your purchasing status, stamp duty is treated differently. For example, if you are a first-time buyer there is an increased threshold, if you are a homeowner you will be required to pay stamp duty on the property value over £125k and if buying a second home, your stamp duty payment will have a higher percentage.
There are also different rules about stamp duty for people purchasing property from overseas, however, this is a complex area that we will not be covering in this article.
Stamp Duty For First Time Buyers
There’s some good news for first-time buyers as if your home is under £300k there will be no stamp duty to pay. This is a big bonus that should help first-time buyers get a leg up on the housing ladder.
For properties priced at £300,001 to £500,000, first-time buyers will pay a 5% stamp duty levy and anything over £500,000 will be at the usual levy. For example, if the property was £350k, 5% will be paid on £50k and amount to £5,500.
Stamp Duty For Homeowners
Stamp duty was first enacted by the Finance Act 2003 and came into force on 1st December 2003. If you own a property and are moving home, a levy is paid on the below sliding scale based on the value of the property you are purchasing.
The total stamp duty payment will be calculated by your conveyancing solicitor and paid to them initially for them to pay HMRC upon completion of your Stamp Duty Land Tax Return. Stamp Duty must be paid to HMRC within 14 days of completion.
The FCA does not regulate solicitors and some forms of buy-to-let mortgages
Stamp Duty For Purchasing A Second Home
When purchasing a second home such as a buy-to-let property, holiday home or even when transactions cross over, a higher rate is payable.
In the same way as stamp duty for homeowners, your conveyancing solicitor will calculate the amount of stamp duty due.
Make Sure You’re Prepared
Stamp duty can be a large additional chunk in addition to your deposit needing to be paid when purchasing a property. It’s important that you are aware of the approximate amount due so you can afford the costs.
There is plenty of helpful information on stamp duty from gov.uk and a helpful calculator here.
*On clicking the third-party website links, you will leave the regulated site of The Mortgage Consultancy. Neither The Mortgage Consultancy nor Sesame Ltd is responsible for the accuracy of the information contained within the linked site.