Facts you should know about Stamp Duty

Your guide to stamp duty

Stamp duty land tax is a lump sum of money you pay the Government when you buy a property. The amount you pay depends on your buying circumstances and the value of the property you are purchasing. The money is usually paid via your solicitor at the end of the conveyancing process - the buyer normally transfers the money to the solicitor’s account, or the solicitor will settle the bill out of the proceeds of a property you are selling at the same time.

What are the stamp duty rates?

Here are the current stamp duty tax charges:

  • 0% if the property is less than £125,000 in value
  • 2% on the portion of the property between £125,000.01 and £250,000
  • 5% on the portion of the property between £250,000.01 and £925,000
  • 10% on the portion of the property between £925,000.01 and £1,500,000
  • 12% on the portion of the property over £1,500,000.01
First-time buyers - is there anything to pay?

Almost every first-time buyer will enjoy a reduced stamp duty bill or even no bill at all, thanks to changes made by the Government in 2017’s Autumn Budget. Here’s how it works for first timers:-

  • 0% on the first £300,000 of any property - as long as it’s below £500,000 in value
  • 5% on any proportion between £300,000.01 and £500,000

If the first-time buyer is purchasing a home worth over £500,000, normal stamp duty fees apply and there is no benefit.

Who qualifies as a first-time buyer?

The rules are quite strict. A genuine first-time buyer is classed as someone who has never owned a property before. Those who have jointly purchased with a friend or partner, have inherited a property or owns/has owned a dwelling in any country will not be classified as a first-time buyer. If you’re buying your first property with the intention of renting it out, you also won’t benefit from first-time buyer status. If you’re in any doubt, get in touch and we’ll explain whether you qualify.

Stamp duty on additional homes

There is an inflated stamp duty rate applicable to purchasers who already own a home and are buying an additional property - whether on their own, with a partner or through a company. People who fall into this ‘additional homes’ remit include: property investors/ landlords; those who own a UK holiday home that they use occasionally or rent out; those who own a home overseas and parents/grandparents who already own a property but are jointly purchasing another home with their children/grandchildren.

It’s quite a complex set up with many grey areas - such as an investor buying a new main residence then qualifying for a tax refund. Additional home stamp duty charges are as follows:-

  • 3% if the property is less than £125,000 in value
  • 5% on the portion of the property between £125,000.01 and £250,000
  • 8% on the portion of the property between £250,000.01 and £925,000
  • 13% on the portion of the property between £925,000.01 and £1,500,000
  • 15% on the portion of the property over £1,500,000.01

There’s a lot to take in so contact us if you would like to clarify anything about Stamp Duty and your property purchase.

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