Buying a property is an exciting time whether you are a first-time buyer or a seasoned property owner. The type of property sought for residential, or investment purposes, is often driven by lifestyle needs and aspirations. Managing the finances involved in owning a property is crucial from the start, and involves forward planning for both the upfront, and ongoing costs. 

 

When does stamp duty have to be paid?

 

Stamp duty is a tax that you may have to pay when you purchase a property, or land, over a certain value in the UK. The amount of stamp duty due following a property purchase depends on a number of factors, including:

 

• The location of the property or land (England, Northern Ireland, Scotland, or Wales)
• The value of the property or land
• If it is residential or non-residential
• The number of properties or land already owned
• Whether it is a first-time buyer purchase or not
• If you are a UK resident or not

 

Stamp duty is also known by different names in different parts of the UK. In England and Northern Ireland, it is called Stamp Duty Land Tax (SDLT). In Wales, it is called Land Transaction Tax (LTT).

 

Who has to pay stamp duty?

 

Generally speaking, you have to pay stamp duty if you buy a property or land over a certain value in England and Northern Ireland.

The current threshold is £250,000 for residential, and £150,000 for non-residential or mixed use. This should be considered when budgeting for a property purchase to avoid any unplanned financial surprises after a dream property is found.

There are some exceptions and reliefs on how much stamp duty may be due:

 

• First-time buyers can claim relief if they buy a property for up to £425,000.
• There is no stamp duty due on the first £425,000. There is however, 5% stamp duty to be paid on anything above this threshold, to a limit of £625,000. Above £625,000, this relief cannot be claimed.
• Investors have to pay an extra 3% surcharge on top of the normal stamp duty rates if they buy an additional residential property worth more than £40,000. This applies even if they are not liable for stamp duty on their main residence.

 

In Wales, the rules are slightly different.

You have to pay Land Transaction Tax (LTT) if you buy a property or land over a certain price. The current threshold is £225,000 for residential, and is currently the same for non-residential properties. Wales also has its own reliefs and surcharges for first-time buyers, home movers, and investors who will own more than one property.

 A good conveyancing solicitor will guide you through the process transparently explaining stamp duty rates.

 

Who is exempt from stamp duty?

 

Some property purchases are exempt from stamp duty. For example, if ownership of a property is transferred due to a divorce, or because it has been gifted, stamp duty may not be payable. If the purchase price of the property is under a certain threshold, the buyer might be exempt from paying stamp duty.

 

What is the stamp duty rate?

 

In England and Northern Ireland, the existing Stamp Duty Land Tax (SDLT) is as follows. Each threshold is charged as “slab”:

 

• 0% for properties up to £250,000
• 5% on the portion between £250,001 and £925,000
• 10% on the portion between £925,001 and £1.5 million
• 12% for the portion above £1.5 million

 

In Wales, current Land Transaction Tax (LTT) rates are as follows:

 

• 0% for the portion up to and including £225,000
• 6% for the portion between £250,001 and £400,000
• 7.5% for the portion between £400,001 and £750,000
• 10% for the portion between £750,00 and £1.5 million
• 12% for any portion over £1.5 million

 

When is stamp duty payable?

 

Stamp duty tax must be paid 14 days post completion. The buyer’s solicitor is responsible for making the payment to HM Revenue and Customs on behalf of the client.

 

Instructing a conveyancing solicitor

 

Buying a property is a significant purchase and should be an exciting time. Navigating the legal process, and the costs involved, is made easier when the right conveyancing solicitor is instructed.

Best Solicitors was amongst the first conveyancing firms to be accepted onto the stringently assessed Law Society Conveyancing Quality Scheme. The team understand that purchasing a property can be a stressful time. We are committed to making the process as easy, and transparent, as possible so you can focus on enjoying making plans for the future with your new purchase.