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STAMP DUTY
Overview.
If you buy a property or land in England or Northern Ireland for more than a certain amount, you must pay Stamp Duty Land Tax (SDLT). The amounts can be quite significant and you have to ensure you factor this into your accounts when considering how much deposit you need to buy a house.
If the property or land is in the following locations, the tax is different:
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You would pay the “Land and Buildings Transaction Tax” in Scotland.
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If the sale took place on or after April 1, 2018, you must pay “Land Transaction Tax” in Wales.
You must pay the tax if you:
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Purchase a freehold property
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Purchase a new or existing leasehold
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Purchase a property through a shared ownership program
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Transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
How much do you have to pay?
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The price you pay is determined by whether the land or property is used for residential, non-residential, or mixed-use purposes.
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If you're buying a home, there are different SDLT rates depending on whether you're a first-time buyer, already own a home and want to buy another, or aren't a UK resident.
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The Stamp Duty Land Tax calculator from can help you figure out how much tax you'll have to pay.
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If you're a first-time buyer or buying many properties ('multiple homes,' for example), you may be able to lower the amount of tax you pay by claiming relief.
Thresholds.
The threshold is the point at which SDLT kicks in. There is no SDLT to pay if you buy a home for less than the threshold.
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For residential homes, the current SDLT level is £125,000.
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The threshold for non-residential land and properties is £150,000.
First-time buyers getting on the property ladder.
If both of the following apply as of July 1, 2021, you’ll obtain a reduction (relief) that implies you’ll pay less or no tax:
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You and anyone else buying with you are first-time buyers.
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The purchase price is less than £500,000.
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If you bought your first home before July 8, 2020, you'll also be eligible for this discount.
When & how you should pay.
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Within 14 days of completing an SDLT return, you must have it delivered to HMRC and pay the tax.
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On the day of completion, your solicitor, agent, or conveyancer will normally file your return and pay the tax on your behalf.
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The tax will then be added to their fees.
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They'll also apply for any tax breaks you may be entitled to, such as if you're a first-time buyer.
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There are some circumstances in which you do not need to submit a return.
If you do not file your return and make your payment within 14 days of completion, you may be subject to penalties and interest.
For further information on Stamp Duty, please visit the government website:
https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
STAMP DUTY
Tax is payable when you purchase a property above a certain value. The amounts can be quite significant and you have to ensure you factor this into your accounts when considering how much deposit you need to buy a house.
The actual name of the tax and the rates applied depend on which country you are in, whether you are a first time buyer, or how many properties you currently own.
- In England and Northern Ireland it’s known as Stamp Duty Land Tax and is usually payable on purchases above £125,000, however from the 8th July 2020 through to the 31st March 2021 a Stamp Duty holiday applies meaning properties up to £500,000 are exempt, as long as the transaction completes by 31st March 2021.
- Wales’ equivalent is called the Land Transaction Tax, and usually applies to properties over £180,000, but this threshold will be temporarily increased to £250,000 from the 27th of July 2020 until the end of March 2021. This doesn’t apply to anyone purchasing an additional property.
- Scotland has the Land & Buildings Transaction Tax which normally applies to properties over £145,000 or £175,000 for first-time buyers. Until the 31st March 2021, this threshold for all home-buyers has been increased to £250,000.
- England, NI and Wales impose a 3% surcharge for additional properties such as second homes or Buy to Let, this still applies to properties in England and NI which would otherwise be exempt due to the Stamp Duty Holiday. In Scotland it’s charged at 4%.
There are a number of criteria that must be taken in to account when calculating exactly. These could include but are not limited to:
- Your monthly outgoings or regular commitments
- Whether your income is a basic salary or includes bonus, commision or overtime
- Whether you are self employed
- The amount of deposit you have
- Your age and whether you are borrowing past your retirement date
The lender however has the final input in to determining how much you can borrow. Each lender has their own criteria and as a broker we are perfectly placed to match you to the right lender for your borrowing requirements.
The calculators do not have the final say in how much you can borrw, your repayments etc., but this is where our expertise and experience in the field come in to play. We can sometimes make available a higher borrowing by taking your personal circumstances in to account.
*all potential borrowing is subject to affordability checks and credit status.
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