Everything you need to know about stamp duty

Most people have come across “Stamp Duty Land Tax” (SDLT) before, but many are still confused.

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Below, we’ll look at Stamp Duty in detail, including how it works for residential buyers in England and Northern Ireland.

What is SDLT?

Stamp Duty is payable when purchasing property or land costing over £125,00 and is charged at a higher rate for a second home.

Scotland and Wales have their own versions: Land and Buildings Transaction Tax, and Land Transaction Tax.

How much is SDLT?

SDLT is payable on values above £125,000. After £125,000, you will be charged in tiered bands as follows:

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£0 – £125,000 = 0%
£125,001 – £250,000 = 2%
£250,001 – £925,000 = 5%
£925,001 – £1.5m = 10%
More than £1.5m = 12%

Remember, if purchasing a leasehold property, second home or you’re a first-time buyer these figures will vary.

Check out https://www.samconveyancing.co.uk/Conveyancing-Solicitors/Conveyancing-Solicitors-Birmingham SDLT calculator so you can see these figures in real terms.

First-time buyers

If you’re purchasing your first home, the 2017 Budget provides relief for properties valued up to £300,000. You still need to pay normal rates for anything over £300,000, and if the property value is over £500,000 you will not be eligible.

Further to this, as of October 2018, first-time buyers under Shared Ownership may be able to claim a refund of SDLT already paid.

Second homes

If the property purchase is a second home, buy-to-let or there’s a delay in selling your previous residence you will need to pay an additional 3% SDLT on top of standard rates if the property is worth over £40,000.

However, if you sell your main home within three years of the purchase you can request a refund of the 3%.

How to pay

You must submit a Stamp Duty Land Tax Return with payment within 30 days of completion, otherwise penalties might be charged. This form must be completed even if the purchase is SDLT exempt.

Conveyancing solicitors Birmingham based or similar can complete this form and arrange payment for you, simply adding the cost to their fees.

When don’t you pay?

If the property costs under £125,000 or you acquired it via inheritance or divorce, SDLT isn’t payable and remember, you might also be able to offer slightly below the asking price to lower the SDLT payable.