Stamp duty is a land tax that is payable on the purchase of certain property types. There are various rates and thresholds depending on the value of the property purchased.
First time buyers have access to special relief and financing options that can help them get on the property ladder.
Stamp duty is a form of tax that is levied on legal documents that transfer ownership of land and property. It is a percentage of the total value of the property and is payable by the buyer, whether they are buying outright or taking out a mortgage saw on Facebook. Stamp duty is also known as Land and Buildings Transaction Tax in Wales and Scotland, where the rates are slightly different.
Historically, a physical stamp was attached or impressed on the document that was subject to stamp duty in order to pay it. However, the current system is more digital, with HMRC collecting the information electronically and processing the tax payment.
The rate of stamp duty varies depending on who you are and what kind of property you are buying. For example, first-time buyers are eligible for a reduced rate. There are also surcharges for second homes and buy-to-let properties.
When you purchase a property, you have 14 days to submit a Stamp Duty return and pay any tax to HMRC. If you miss this deadline, you will be charged a penalty. Usually, your solicitor or licensed conveyancer will handle the stamp duty submission and payment on your behalf. This is to ensure that all paperwork is in order and that the correct rates of stamp duty are paid. However, it is still your responsibility to ensure that this is done on time.
How much stamp duty do I pay?
Whether you are buying your first home, a new-build property or moving house to upsize or downsize, stamp duty is a cost that will need to be factored into your budget. The exact amount that you pay will vary depending on the value of the property and your status as a buyer.
If you are a first-time buyer in England, Wales or Northern Ireland you may be eligible for a stamp duty rebate on properties that cost PS250,000 or less. You can use the government’s stamp duty calculator to find out how much you’ll need to pay.
In Scotland, the stamp duty levy is known as Land and Buildings Transaction Tax (LBTT) and has different rates and thresholds. Second-home buyers and landlords who purchase properties in Scotland worth over PS40,000 pay an additional LBTT rate known as the Additional Dwelling Supplement.
You can pay your stamp duty via a solicitor or conveyancer who will submit the return on your behalf to HMRC. You can also pay by cheque or a personal credit card online or at your bank, building society or post office (a fee applies). Whatever method you choose to use, it is important to make sure that the return is submitted on time as failure to do so could result in penalties and interest charges.
Can I pay stamp duty in instalments or by credit card?
Stamp duty is a significant cost to consider when buying a property. However, there are ways to lessen the impact if you are willing to be creative.
Stamp Duty Land Tax (SDLT) is a progressive tax paid when purchasing a freehold or leasehold residential property over PS250,000 in England and Northern Ireland (separate taxes apply in Wales and Scotland). There are also separate rates for second homes, commercial properties and mixed-use land.
First-time buyers can benefit from a reduced rate for properties below a certain price threshold. Additionally, there are a variety of mortgage financing options available to help people onto the property ladder. These include the Lifetime Individual Savings Account (LISA) and the Help to Buy ISA, which both offer a bonus from the government to put towards a new home.
In addition to the standard rates, a surcharge of 3% is applicable for buyers purchasing a second home or a buy-to-let property. However, the surcharge can be reclaimed if you sell your previous main residence within three years. Stamp duty also does not apply to removable fixtures and fittings, such as carpets or curtains, but only the property price itself. It is important to consult a professional conveyancer before attempting to reduce your bill by subtracting the value of these items from the property price.
How do I pay stamp duty?
Stamp duty, or Stamp Duty Land Tax (SDLT), is a government charge that home buyers must pay. It is charged on properties that are over a certain value and goes towards funding public services. The same rules apply whether you are buying a property in cash or with a mortgage, and the amount of SDLT you pay depends on how much the property costs.
The rules around SDLT vary across the UK. In England and Northern Ireland, there are different thresholds and rates based on how much the property costs. There are also different rates for second homes and buy-to-let properties, and first-time buyers may be exempt from paying all or part of their stamp duty. Scotland and Wales have slightly different rules, with separate thresholds and rates for new-build homes.
Generally, you have 14 days from the date of ‘effective completion’ to pay your stamp duty bill through HMRC. Typically, your solicitor or conveyancer will handle the payment on your behalf and submit a return to HMRC, but it is your responsibility to make sure the stamp duty is paid on time. Failure to do so could result in penalties and interest. This applies even if you are exempt from paying stamp duty, as it is your responsibility to submit the correct paperwork. You should check with your solicitor or conveyancer for more information.
