Stamp duty is often at times the last thing buyers think of when searching for their dream home. However, it is a mandatory tax that might cost you thousands of pounds. Read on to learn more about stamp duty and find out if you’re eligible for any tax relief.
What is Stamp Duty?
Stamp duty is short for Stamp Duty Land Tax (SDLT) it is a tax that must be paid by the buyer on purchasing property or land over a certain price in England and Northern Ireland.
When is Stamp Duty Paid?
The Stand Duty Land Tax must be paid when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, eg you take on a mortgage or buy a share in a house
What is the Stamp Duty Rates?
The amount you must pay varies on your circumstances and the value of the property and whether it is freehold or leasehold.
You are exempt from paying stamp duty if the property purchase value is less than £125,000 or if you are a first-time buyer, however, If the purchase price is over £500,000, you must follow the rules for people who’ve bought a home before.
Below we have put together a simple table detailing the SDLT tax rate for freehold sales and transfers, the table can also be used to work out the stamp duty rate for leasehold purchases.
|Property or lease premium or transfer value||SDLT rate|
|Up to £125,000||Zero|
|The next £125,000 (the portion from £125,001 to £250,000)||2%|
|The next £675,000 (the portion from £250,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
Still not sure how much you’ll need to pay? You can find a free stamp duty rate calculator on the GOV website, here is a link to the Stamp Duty Land Tax calculator.
Your chosen conveyancer will be able to advise you on how much stamp duty you’ll need to pay and they’ll also arrange for the payment to be transferred on completion of your property purchase.
There are a number of factors property purchasers will need to consider before buying property here is a list of the top 5 questions to ask before buying a property.
The team at Convey with Me is committed to making conveyancing easier. Get in touch with us on 0191 341 0113 for a free conveyancing quote or fill out the form on our website.