Find out more about the Stamp Duty you need to pay when you purchase property.
When you’re buying a home, it’s great to know the purpose of each fee that you’re paying. It’s easy to feel as if you’re being charged for things you may know nothing about. That’s why we wanted to break down Stamp Duty. A SDLT (Stamp Duty Land Tax) payment is a crucial part of the conveyancing process. Yet, what it actually is can feel a little murky for first-time buyers.
So, what is it exactly? Stamp Duty Land Tax (SDLT) is the tax required by the UK Government when someone purchases land or property over a certain threshold. The tax is payable to HMRC and the amount is dependent on whether the land or property is for residential, non-residential or mixed purposes.
Here, Beaumont Legal conveyancer David Harrison explains what Stamp Duty means for you.
When is Stamp Duty payable?
Well, Stamp Duty Land Tax (SDLT) is payable when you buy property or land over a certain price in England or Northern Ireland. It’s important to note that properties in Wales are subject to a different tax regime known as the Land Transaction Tax (LTT).
Why is it helpful to use a solicitor when paying SDLT?
It’s best to use a solicitor as the forms for submitting SDLT can be quite complex and we want to ensure that the client is paying the right amount. Also, if the payment is made incorrectly or late, the client will incur interest payment. We want to avoid this.
What is the house price threshold for paying Stamp Duty?
The current SDLT threshold is £125,000 for residential properties. The higher the price, the higher the SDLT.
And how about Stamp Duty relief?
Stamp Duty relief is a discount for first time buyers, meaning you may pay a smaller fee or be exempt from SDLT. Where more than one person is buying the property, you both must qualify for the relief to count.
Will I have to pay more Stamp Duty if I’m purchasing a second home?
Yes. There is a surcharge to tax investors/the wealthy, for example property developers and buy-to-let landlords. There are occasions where a home owner may have to buy their new home before they sell their ‘main residence’. If they do this and then sell within three years, they would be able to claim back the SDLT surcharge paid.
How is the Stamp Duty cost calculated?
The SDLT calculation varies dependent on whether you qualify for a discount (the Stamp Duty relief), are buying a new or existing leasehold, own other property or you are buying through a shared ownership scheme.
Is there a way I can estimate how much SDLT I’ll have to pay?
Absolutely. The HM Revenue and Customs’ (HMRC) have a useful online calculator to help you work out how much SDLT you will have to pay when you buy your new home/house.