What is Stamp Duty?
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax on each home or land purchase that takes place in England or Northern Ireland. If the purchase price of your property exceeds a minimum threshold, you will need to pay stamp duty.
How much is Stamp Duty?
On the 23rd of September 2022, the Government updated the stamp duty land tax thresholds for both first time buyers, and those who are moving properties. Amongst these modifications, is an increase in the minimum purchase price where stamp duty is applicable, this has now risen to £250,000, which means for properties and land up to the value of £250,000, you'll pay 0% SDLT.
Previously, the threshold was 0% on the first £125,000, and 2% SDLT between £125,001 and £250,000. This change in the SDLT threshold means homebuyers are saving as much as £2499.98.
Another change which was brought in from September 23rd 2022, was that first-time buyers are now exempt from paying Stamp Duty on homes up to the value of £425,000, prior to this change, first-time buyers were exempt on property prices up to £300,000.
|
Property Value
|
SDLT rate |
|
Up to £250,000.
|
0% |
|
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% |
The way to pay Stamp Duty
On the day of completion, your solicitor will often handle this for you and add the cost to their costs.
Alternatively, you can also submit a return and handle the tax payment on your own. You must submit an SDLT return to HMRC and make the required tax payment within 14 days of completion.
Additional Costs
When purchasing a new residential home, you'll often need to pay an additional 3% on top of the SDLT rates if you intend to own more than one home. If the property you're purchasing is a replacement for your primary residence, which has already been sold, you won't have to pay the additional 3% SDLT.
You will be charged higher rates if you have not sold your primary residence by the time you complete your new acquisition. This is because you own two properties. If you sell your former primary residence within 36 months, you are eligible to ask for a refund.
You will be required to pay a surcharge if you did not reside in the UK for at least 183 days (6 months) in the year prior to your purchase. If you must pay the surcharge, you must also pay any other rates of SDLT that apply, such as:
- If you are a first-time buyer.
- If you currently own a home and are purchasing a second home.
Find out more about this surcharge here.
There are numerous SDLT regulations and rate calculations for:
- Shared ownership properties.
- Corporate entities.
- Individuals purchasing six or more residential homes in a single transaction.
- Several transactions involving the same buyer and seller (referred to as "linked purchases").
- Organizations and trusts purchasing homes.
For more information, visit the Government website.
