Does Stamp Duty Apply?

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Buying a property can be a stressful time, property views, renovations, taxes and all sorts, but you may be wondering whether you need to pay stamp duty and how and when this can be paid. 

So firstly we ask the simple question of: 

What is stamp duty ?

Stamp duty is a sum of money that you have to pay when buying a property in England or Northern Ireland above £500,000. If you are purchasing additional properties you will still have to pay an extra 3% in stamp duty on top of the revised rates for each property value band.

Stamp duty is payable on property and land purchases or transfers above set Stamp Duty Land Tax (SDLT) thresholds and applies to both freehold and leasehold transactions. 

Does stamp duty apply to your property? 

Until 30th June 2021 you will pay no stamp duty on the purchase of your main property to the value of £500,000. If the property you are buying costs more than £500,00 you will need to pay stamp duty based on the rate bands. The below table summarises the stamp duty for first time properties being bought. 

Property priceStamp duty rate
£0- £500,0000%
£500,001-£925,0005%
£925,001- £1.5 million10%
Over £1.5 million 12%

IMPORTANT! From 1st July 2021- 30th September 2021 the SDLT threshold will be: 

  • £250,000 for residential properties
  • £150,000 for non-residential land and properties

This threshold for residential properties will change again on 1st October 2021. 

The SDLT will be: 

  • £125,000 for residential properties
  • £150,000 for non-resident land and properties

So when do you have to pay stamp duty? 

You pay stamp duty tax when: 

  • Buying freehold property
  • Buying a new or existing leasehold property 
  • Buying a property through  a shared ownership scheme 
  • Are transferring land or property in exchange for a payment from another.

What if you are buying a second home ? 

If you are buying an additional property such as a second home or holiday home, you will have to pay an additional 3% stamp duty in addition to the rate as of 30th June 2021. This applies to second homes purchased over £40,000. 

Property priceStamp Duty rate
£0- £500,0003%
£500,001- £925,0008%
£925,001- £1.5 million 13%
Over £1.5 million15%

IMPORTANT! You must have completed your second home property purchase by the 30th June 2021 to be able to qualify for the revised rate on stamp duty. 

How and when do you need to pay ? 

You must send an SDLT return to HMRC and pay the tax within 14 days of completion. 

IMPORTANT! You will be charged penalties and interest if you fail to file your return and make your payment within 14 days of completion! 

You may now ask when stamp duty is not payable… 

When is stamp duty not payable? 

There are situations where stamp duty is not payable or can be reduced:

  • If your property value is just over the rate band. If the price is only slightly higher than the band the seller or the estate agent will accept a lower price. 
  • Transfer of a property in separation or divorce. If you are separating or divorcing from a partner, then there is no stamp duty to pay if you have to transfer a portion of the home’s value to them. 
  • Transfer of deed- If you transfer the deed to your home to another individual- this can be either as a gift or in your will, they will not have to pay any stamp duty on the market value of the property. 

TIP: Ensure that none of the above apply to you, if any of the above do apply to you then get in touch with HMRC as soon as possible as you could have your stamp duty reduced!

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