Stamp duty, also known as Stamp Duty Land Tax (SDLT), is a form of tax that is applicable when purchasing a property in England or Northern Ireland.
It is important to note that Scotland and Wales have their own versions of stamp duty, known as Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively.
The amount of stamp duty you are required to pay is determined by the stamp duty tax bands and where your property price falls within those bands.
When it comes to paying stamp duty, it is the buyer’s responsibility, not the seller’s. Typically, your solicitor will handle the stamp duty return on your behalf, although you have the option to do it yourself. As part of this process, any payment owed to you will be returned by your solicitor.
For first-time buyers in England or Northern Ireland, there is relief from paying stamp duty tax on primary residential properties valued up to £425,000. For properties costing up to £625,000, stamp duty is waived on the first £425,000, but a 5% stamp duty tax is applicable to the remaining amount, up to £200,000. If the property exceeds £625,000, the standard rates of stamp duty apply and first-time buyers’ relief is not applicable.
Stamp duty thresholds determine the amount of tax you need to pay based on the value of your property. If your property value is below the base threshold, no stamp duty is required. However, if your property exceeds certain thresholds, you may need to pay more. It is important to note that these rates do not apply to first-time buyers.
| Property Value | Stamp Duty Rate |
|---|---|
|
Up to £250,000 |
Zero |
|
The next £675,000
(the portion from £250,001 to £925,000) |
5% |
|
The next £575,000 (the portion from £925,001 to £1.5 million) |
10% |
|
The remaining amount (the portion above £1.5 million) |
12% |
When it comes to paying stamp duty tax, you have 14 days from completion to file a Stamp Duty Land Tax (SDLT) return. Your solicitor usually handles this process and includes the tax amount in their fees. If your solicitor does not handle the return, you can file it yourself and pay the tax directly to HMRC.
Failure to submit the return and pay the tax within the specified timeframe may result in penalties and interest charges.
Adding stamp duty to your mortgage is possible, but it may incur interest charges. Depending on the length of your mortgage term, this can become costly, so it is advisable to pay upfront if feasible. If you are unable to pay the stamp duty tax upfront, it is common to add it to your mortgage along with other fees.
In certain cases, you may be eligible for a stamp duty refund. If you purchased a new property without selling your previous property and then sold the previous property within a three-year period, you may be able to claim a refund.
To claim a stamp duty refund, you will need to complete an SDLT return and submit it to HMRC either online or by post. While you can hire a solicitor or conveyancer to handle the return for you, it is your responsibility to organise the process.