From what it is, why we pay it to who it applies to, as leading UK conveyancers we get asked a lot of questions about stamp duty. If you are considering buying or selling a property and want to know more about this compulsory tax read on dear reader. Here we answer all of those niggling questions about stamp duty so by the time you finish your law-tee you will be a pro. Let’s dive in.
What Is Stamp Duty?
Simple enough, still a lot of people pay stamp duty without knowing exactly what it is. Stamp duty is essentially land tax that you pay to HMRC. Mainly when you buy a property over a certain amount in the UK and Northern Ireland. This applies to freehold property, new and existing leasehold property, taking over a mortgage or buying through a shared ownership scheme. The amount depends on a number of things which we will get to next.
What Affects How Much You Pay?
A number of factors can affect how much stamp duty you pay from what the property will be used for to whether you own other property. The threshold for stamp duty changed in April 2024, meaning that more tax is now paid and relief has been lowered. These are the current stamp duty rates;
£0- 125,000 0%
£0- 300,000 0% (stamp duty for first time buyers)
£125,000- £250,000 2%
£250,000- £920,000 5%
£925,000 – 1.5m 10%
£1.5m + 12%
The good news is there is relief for first-time buyers buying a property up to £300,000. However, stamp duty can add a significant cost to buying a property. Also, this needs to be factored in at the beginning of the process. This allows you to budget and look for properties within your total price range. Remember, there are also conveyancing costs and potential lender fees. Hence, your total purchase price will exceed the property value. There are easy to use stamp duty calculators to help you get prepared.
When And How Do You Pay Stamp Duty?
Stamp duty is paid up to 14 days after the completion of your purchase. The headache can be handled by your solicitor. They can advise on when funds need to be transferred so you do not miss the deadlines. If you wish to pay yourself you can go right ahead and do so on the government website. You must make sure you do so on time so being prepared is key.
Is There A Fee If You Miss The Deadline?
Yes, you may incur a penalty if you miss the deadline. You will also pay interest on the amount from every day after the deadline – not ideal. This is why letting your solicitor take care of it is far easier and more convenient for many buyers. If for any reason you get a penalty for which there is a reasonable excuse you may be able to appeal it. The best thing to do? Pay it on time and get on with enjoying your new home.
Can You Get A Mortgage To Cover Stamp Duty?
Sure thing, however do consider that this will mean a lot more interest. If you can pay this off without increasing what you borrow you will likely thank yourself in the long run. If you have any questions about stamp duty you can ask your mortgage lender or solicitor always.
Does Owning Property Abroad Increase Your Stamp Duty?
Lucky enough to own property abroad? If you do when you buy property in the UK you will have to pay an additional 5% on the above thresholds. There are a few exceptions to this rule. For example, if this will become your new residence or the value is under a certain amount. Hence, make sure you fully discuss your circumstances and what the property will be used for with your solicitor at the beginning. It is worth keeping up to date with stamp duty changes as this tax can be subject to changes such as those made in April this year. Knowing your liabilities allows you to plan your property sales and purchases accordingly.
Are You Buying A Property?
If you are, we have more good news. Waterstone Legal are currently offering a free consultation to discuss your purchase, answer any questions and get your set on your journey. We like to keep things simple so we give you a free quote and fixed-fee on your purchase and even provide a fast-track service for those in a hurry. This gives you access to your own private property portal to track important updates and a dedicated solicitor to handle your case.
Book a call today and let’s get a wiggle on securing your dream home.
