What You Need To Know About Stamp Duty

what is stamp duty uk tax

There are calls for Stamp Duty reform to reinvigorate the housing market and help people onto the property ladder. But what exactly is this controversial tax, and what do you need to know before buying a home? 

What Is Stamp Duty? 

Stamp Duty (Stamp Duty Land Tax) is a tax paid when buying a home (or land) in England and Northern Ireland. It is only due on properties over a certain value. 

In Scotland, homebuyers pay Land and Buildings Transaction Tax instead of Stamp Duty. In Wales, people pay Land Transaction Tax. 

You have 14 days after you complete the purchase of a property to pay Stamp Duty. Typically, your conveyancer will calculate and pay your bill on your behalf (having collected the money from you in advance). 

It is the home buyer who pays Stamp Duty, not the seller. And, despite calls for bold housing reforms, the Chancellor has no plans to change this. However, he is looking to simplify the tax system ahead of his autumn Budget. 

Stamp Duty Rates 

The amount of Stamp Duty paid when buying a home depends on the purchase price, whether it is your only property, and whether you are eligible for Stamp Duty relief. 

The current Stamp Duty threshold (the level at which you start to pay the tax) is £125,000 for residential properties (e.g. house or flat). The Stamp Duty payable increases with the cost of the property. 

You will have to pay a surcharge if you are purchasing a buy-to-let or second home. However, you do not have to pay this if you’re buying a property to replace your current home and that has already been sold. If there is a delay in selling your home, you will have to pay the higher rate, but you should be able to get the extra back if you sell within 36 months.

stamp duty rates uk

Example If you buy a house for £300,000 (and you don’t own any other properties), you pay: 

• 0% on the first £125,000 = £0.00 
• 2% on the next £125,000 (up to £25,000) = £2,500 
• 5% on the remaining £50,000 = £2,500 

Total = £5,000. 

See the current Stamp Duty rates and try HMRCs Stamp Duty calculator. 

Stamp Duty For First-Time Buyers 

First-time buyers are exempt from Stamp Duty on homes worth up to £300,000. Further relief is available for purchases up to £500,000. First-time buyers are eligible if they: 

• And anyone else they are buying with are first-time buyers 
 Have not inherited a home  
• Have not owned property abroad. 

If the home is worth over £500,000, first-time buyers follow the same rules as everyone else. 

Claiming Back Stamp Duty 

If you paid Stamp Duty on a shared ownership property between 22nd November 2017 and 29th October 2023 but did not get a discount, you can apply for a refund. 

However, this should have been done by the 28th of October 2023.

To claim back Stamp Duty, you should write to HMRC with the following information: 

 The Unique Transaction Reference Number (UTRN) from your Stamp Duty return (your solicitor will be able to give you this) 

 Details of how much you overpaid 

 Your bank or building society account name, number and sort code. 

Can You Avoid Stamp Duty? 

You can’t avoid Stamp Duty, but you might be able to reduce the amount due by removing the cost of removable fittings from the total price (and paying these separately). Buyers and sellers must agree on a realistic price for such fittings (and be able to justify this to HMRC). You could also borrow more on your mortgage to cover your Stamp Duty tax bill

Using A Solicitor To Help Get Your First Property 

Conveyancing solicitors seems to provide the very best legal advice delivered in plain English. This includes making sure you understand how much Stamp Duty you will have to pay, and whether you qualify for any relief.

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