Stamp duty: what is it and how has it changed?

Stamp duty: what is it and how has it changed?

What is Stamp duty?

Stamp Duty Land Tax is a fee that is charged in England, Wales and Northern Ireland on residential properties costing over £125,000. If you are buying a property in Scotland, Stamp duty works slightly differently.

How much is Stamp duty?

The Stamp duty fee varies depending on the cost of the property and the type of buyer you are. For example; whether you are a first-time buyer, moving home or have multiple properties.

Below are the standard rates for a residential property (excluding first-time buyers, please continue reading for first-time buyer table).

Property Price

Stamp duty charged on the proportion of price in band

>£125,000

0%

£125,000 – £250,000

2%

£250,000 – £925,000

5%

£925,000 – £1.5M

10%

Above £1.5M

12%

Source: GOV.UK

How do I pay Stamp duty?

When your purchase has completed, you have 30 days to submit your Stamp Duty Land Tax return and pay your Stamp duty charges. Your solicitor is likely to do this for you, however, it is your responsibility to ensure you pay on time.

What has changed for first-time buyers?

In November, the chancellor announced a change to Stamp duty for first-time buyers in England, Wales and Northern Ireland.

First-time buyers will no longer need to pay stamp duty on properties up to £300,000. Furthermore, first-time buyers looking to purchase a property worth up to £500,000 will not need to pay Stamp duty on the first £300,000.

The rate table below shows the new stamp duty rates for first-time buyers.

Purchase Price

Stamp duty charged on the proportion of price in band

Up to and including £300,000

0%

<£300,000 – £500,000

5%

<£500,000

SDLT is paid at standard rates on the whole price

Source: GOV.UK

According to GOV.UK, this will mean that 80% of first-time buyers will now no longer have to pay Stamp duty. For a first-time buyer purchasing the average first-time buyer property, this will mean relief worth £1,660. For those who have already saved up for their stamp duty costs, they can now benefit from putting these savings towards their deposit.

Who counts as a first-time buyer?

A first-time buyer is someone who has never owned a property before. The Stamp duty changes for first-time buyers only apply to those buying their first a residential property, not a buy-to-let or second home. A first-time buyer looking to purchase a property with a partner will not benefit if their partner has previously purchased a property.

Do I need to do anything if I am exempt from Stamp duty?

If you do not need to pay Stamp duty, for example; if you are a first time buyer purchasing a property under £300,000, you still need to submit a return. Your solicitor is likely to do this for you.

 

Looking to purchase your next property? Use a broker like Freedom Mortgages who can compare over 90 lenders to find a mortgage tailored to your individual needs.

 

The above post does not constitute as financial advice and is intended to be informative.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be a 1% broker fee for mortgage advice. The maximum total fee of £995 is payable on completion of your mortgage.

 

 

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