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Unlike the name may suggest, stamp duty has nothing to do with the stamps you put on letters to post them. Instead, stamp duty is a tax that you pay to the government when you buy a house. More precisely stamp duty is the tax paid on the creation of legal documents.
Currently you only need to pay stamp duty if the property costs more than “£125,000 for residential properties and £150,000 for non-residential land and properties.” (Stamp Duty Land Tax, n.d.). For homes £125,001 to £250,000 the tax rate is 2%, £250,001 to £925,000 is 5%, £925,001 to £1.5m is 10% and over £1.5m is 12%. However, this may vary for residential leasehold properties. (Stamp Duty - Everything you need to know, n.d.).
When purchasing a second home with a value above £40,000 an additional 3% is required on top of the original stamp duty. Depending on the value of your second home this could increase. For example, a house worth £500,000 can expect to pay an extra 8%. However, if you sell your main residence and purchase a new main residence at the same time then the 3% higher rate is not applied. If you buy a second home and use it as a main residence but don’t sell the other property at the same time but sell within three years you can reclaim the 3% additional tax back from inland revenue.
The tax must be paid regardless of whether the house is freehold/leasehold or you’re buying it outright or with a mortgage. However, if you’re buying your first home you can get a discount or pay no stamp duty if:
You pay the tax when you:
Source: the facts and figures are courtesy of gov.uk and accurate as of 09:00 28/06/2018.
Using the HRMC stamp duty calculator is a great way to estimate your stamp duty costs.
09 Jul 2018
City Gate House
11 St Margaret's Way
EHL Conveyancing Limited is registered in England and Wales with company number 11074606 having its registered office at City Gate House, St Margaret’s Way, Leicester, LE1 3EA. EHL Conveyancing Limited is regulated by the CLC under practice number 3464.
Work is directed to firms according to Lender Panel status. All panel firms are regulated by either the CLC or SRA and will contract with you directly. EHL Conveyancing Limited is under licence from EHL Group Limited.
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