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Stamp Duty

Robert explains Stamp Duty.

(You can also find out why we're leading the top ten firms in Scunthorpe for residential purchase completions on our Conveyancing page!)

You will have heard the saying "'In this world nothing can be said to be certain, except death and taxes."

One such tax you are likely to come across is Stamp Duty.

What is Stamp Duty?
Stamp Duty or to give it its full title Stamp Duty Land Tax (SDLT) is a government tax which is payable on the vast majority of residential property purchases.

Who Pays?
It is a tax payable by the buyer and not the seller. It is important therefore that any buyer asks his solicitor to calculate the tax payable and to include it in any costs quotation.

How much tax will I have to pay?
The rates of SDLT are set out below. To complicate  matters the government have now in addition to the basic rate SDLT recently introduced Higher Rate SDLT which is payable when you buy a second property.

Purchase Price Basic Rate SDLT Higher Rate SDLT on a Second Property Purchase
Up to £40,000 0 0
£40,001 - £125,000 0 3%
£125,001 - £250,000 2% 5%
£250,001 - £925,000 5% 8%
£925,001 - £1.5 million 10% 13%
Over £1.5 million 12% 15%

By way of example: If a first time buyer was to buy a property for £275,000 the SDLT payable would be  £3,750 calculated as follows:

Purchase Price Bands (£) Percentage Rate (%) SDLT Due (£)
Up to £125,000 0 0
Above £125,000 and up to £250,000 2 2,500
Above £250,000 and up to £925,000 5 1,250
Above £925,000 and up to £1.5 million 10 0
Above £1.5 million 12 0
  Total SDLT due 3,750

If though a buyer owns an existing property and buys an additional property eg a Buy to Let then higher rate SDLT would be payable. On the same property valued at £275,000 if purchased as a buy to let second property would attract higher rate SDLT of £12,000

Purchase Price Bands (£) Percentage Rate (%) SDLT Due (£)
Up to £125,000 3 3,750
Above £125,000 and up to £250,000 5 6,250
Above £250,000 and up to £925,000 8 2,000
Above £925,000 and up to £1.5 million 13 0
Above £1.5 million 15 0
  Total SDLT due 12,000

What if I am buying with a mortgage?
This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

When is Stamp Duty paid?
You’ll need to submit a very detailed Stamp Duty Land Tax return and pay what you owe within 30 days of completing the purchase of your home. However because there are also shorter timetables relating to registration of your purchase at the Land Registry in practical terms the duty must be paid within a few days of the purchase completion date.

If you don’t submit a return and pay the tax with that 30 days, HMRC will charge you penalties and interest

Can QualitySolicitors Bradbury Roberts & Raby Help?
We certainly can. We will always include SDLT in the initial quotation we give you to make sure there are no nasty suprises later in the transaction. If you use QualitySolicitors Bradbury Roberts & Raby as your solicitors we will complete and file the SDLT return on your behalf. We will also make the tax payment for you and obtain the necessary receipt from the tax man. 

Leave everything to us. You can concentrate on unpacking the boxes and moving into your new home.

By Robert Taylor, Conveyancing Consutlant for QualitySolicitors Bradbury Roberts & Raby


Posted in: Property, Stamp Duty

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