Stamp Duty, What Is It?


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STAMP DUTY, WHAT IS IT?

What is Stamp Duty, who pays it, and why? If you aren’t sure then you’re in the same boat as the majority of people so there is no need to worry. Read our handy guide below and get up to speed in minutes. 

What is stamp duty?

Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England or Northern Ireland over a certain price. 

From 1 July to 30 September 2021, you won’t have to pay Stamp Duty on residential properties costing up to £250,000. If you’re a first-time buyer, you will pay no Stamp Duty on properties costing up to £300,000, and a discounted rate, up to £500,000.

From 1 October, you will pay Stamp Duty on properties costing more than £125,000 for residential properties, unless you’re a first-time buyer.

If you’re buying a second home, you’ll still pay an extra 3% Stamp Duty on properties costing more than £40,000 at the relevant rate at that time.

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage. If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.

How much is Stamp Duty?

There are several rate bands for Stamp Duty. The tax is calculated on the part of the property purchase price falling within each band. The bands can be found by clicking here.

I currently/will own more than one property. Will I be liable for more stamp duty?

Unless you are selling and replacing your main residence, the purchase of a property in addition to your main residence is likely to incur Stamp Duty.

When is Stamp Duty not payable?

There are circumstances in which Stamp Duty is either not payable or can be reduced.

  • If the property is slightly over rate band. If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.
  • Transfer of property during separation, divorce or dissolution. If you’re divorcing or separating from your spouse or partner, there’s no Stamp Duty to pay if you transfer a proportion of your home’s value to them.
  • Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your will – they won’t have to pay Stamp Duty on the market value of the property.

But if you exchange properties with another person, you will each have to pay Stamp Duty on the property you receive based on its market value.

When do you have to pay Stamp Duty?

You have 14 days to file a Stamp Duty Land Tax (SDLT) return and pay any SDLT due. If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.

How to pay Stamp Duty

Usually your conveyancer/solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself. Either way, you’re responsible for making sure it’s all submitted on time. You must still submit a return (unless exempt) even if you won’t need to pay any Stamp Duty.

Not quite ready to start the mortgage process just yet? Maybe you have a question you want answering? That’s fine, we’re here to support you when you need us – just contact us and we’ll be happy to help.

Not quite ready to start the mortgage process just yet? Maybe you have a question you want answering? That’s fine, we’re here to support you when you need us – just contact us and we’ll be happy to help.
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