What is Stamp Duty and when does it apply?
Stamp Duty Land Tax (SDLT) is a tax that must be paid to HMRC when you purchase a property or land over a certain value. SDLT no longer applies in Scotland, instead you’ll have to pay ‘Land and Buildings Transaction Tax’.
Hasn’t Stamp Duty recently changed?
Yes, at the end of 2014 the Government decided to change the way Stamp Duty is calculated. The flat rate scheme has been replaced and now it’s charged at different rates depending on how much the purchase price fits into each band. It may seem complicated at first but there is good news, the chances are you’ll end up paying less stamp duty now than you would have a year ago.
Will I have to pay Stamp Duty?
Quite simply, if you’re buying a home with a value of £125,000 or more you will have to pay Stamp Duty. The current threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. Please look at the details below to understand how much you’ll have to pay; or use our stamp duty calculator.
Do I have to pay Stamp Duty on ‘Buy-To- Let’ property?
Anyone buying a second home or buy-to-let property – ie any property that won’t be your primary residence – now has to pay an extra 3% on each tier of stamp duty above a purchase price of £40,000.To find out how much you have to pay on your buy-to-let property please use our buy-to-let stamp duty calculator.
When do I have to pay the Stamp Duty?
You usually pay via your solicitor, who’ll pay it on your behalf. You have up to 30 days to pay from the date contracts are exchanged, however it’s best practice to pay on the date you complete on your purchase.
How much do I have to pay?
Stamp duty is now tiered, meaning that you pay different rates on different portions of the property price. You pay nothing on the first £125,000 of the property price. Then 2% on anything over £125,000, 5% on anything over £675,000, 10% on anything over £575,000 and 12% on the rest. Look at the example below for a guide if you wanted to buy a property for £275,000.
Property purchase price: £275,000
Portion 1: £0 – £125,000 – 0% tax, so total paid for this amount of the purchase price = £125,000
Portion 2: £125,000.01 – £250,000 – 2% tax (£2,500) + £125,000 = £127,500
Portion 3: £250,000.01 – £275,000 – 5% tax (£1,250) + £25,000 = £26,250
Total paid: £278,750 (£3,750 of which is stamp duty)
To see how much you will have to pay, pay please use our Stamp Duty Calculator.
Can I add the Stamp Duty Land Tax onto my mortgage?
Yes, you can add it to your mortgage and many people do, however long term it’s better to try and avoid this. Placing the stamp duty costs to your mortgage will affect your loan to value ratio and some instances lenders may choose to either not offer you a mortgage or charge higher interest rates. Also, you’ll be paying interest on the Stamp Duty for the length of your mortgage. In some cases, this could be over 25 years.