If you’re looking at buying a home, you may have come across the term ‘Stamp Duty Land Tax’.
This is a self assessed tax that you need to pay when purchasing a property. The rate that you pay depends on many factors such as the property price and whether you’re a first-time buyer.
In this article, Conveyancing Partner Michelle Petersen explains stamp duty in more detail and outlines what the current rates are.
What is Stamp Duty?
Stamp Duty Land Tax or SDLT is a form of tax that you pay when purchasing a property, much like the VAT that is paid on everyday items.
However, unlike VAT, Stamp Duty is variable meaning that it changes. Depending on the circumstances, the amount of SDLT you pay when you buy a property can be increased, reduced or not need to be paid at all.
SDLT only applies to properties in England and Northern Ireland. Scotland and Wales have separate systems for paying tax on properties.
How much is Stamp Duty?
How much you’ll pay in Stamp Duty mainly depends on the purchase price of the property; but can also depend on whether:
- You’re a first-time buyer
- You already own a property
- You’re not a UK resident
I’ve covered all of these circumstances below.
How much is Stamp Duty for previous homebuyers?
Previous homebuyers (aka non-first time buyers) won’t pay any tax on the first £250,000 of the property price, but will pay 5% tax on anything between £250,001 and £925,000.
You’ll pay 10% tax on any money between £925,001 and £1.5 million, and 12% on anything above £1.5 million.
How much is stamp duty for first time buyers?
First time buyers can claim stamp duty relief, meaning that they’ll pay no SDLT on the first £425,000 of the purchase price and only 5% on the remaining portion above £425,001.
For example, if the property is worth £600,000 then you’ll only pay £8750 in stamp duty; as opposed to the usual £17,500.
First time buyer relief does not apply to properties worth above £625,000.
We’ve put together a free 32-page guide for first-time buyers, which covers everything from mortgages and property loans to completing and moving in. You can read it here.
Click here to read the full article.