What is stamp duty?

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Stamp duty is essentially a tax which may be payable when you purchase a property. The amount of stamp duty payable is calculated at a specific percentage if it crosses the threshold provided by the law. How much stamp duty you will need to pay differs in between England & Northern Ireland, Scotland, and Wales.

When are you liable to pay stamp duty?

No stamp duty is payable if you are a first-time buyer.

After the recent amendment in law, stamp duty is payable on additional properties you purchase in England & Northern Ireland which is worth more than £500,000.

As for Scotland, you have to pay stamp duty on any additional property you purchase which is worth more than £250,000.

In Wales, stamp duty is only payable on an additional property worth more than £180,000. These amendments, however, are only in place till 31 March 2021.

Are you a first-time buyer?

At this point, you may want to know whether you are a first-time buyer or purchasing additional properties for the purposes of stamp duty. The stamp duty will apply for second homes whether you plan to live in it or rent it out to tenants.

Do you own a property abroad?

Further, if you own any property abroad and are purchasing your first property in the United Kingdom, you will be considered as purchasing a second home.

Shared ownership

You should also take note that if you are buying property with another person who already owns a home but you don’t own any properties, you will still be liable to pay stamp duty.

Married couples and civil partnership

Further, married couples or people in a civil partnership are classified as one unit, meaning thereby that you will have to pay stamp duty if your spouse or partner owns a property.

How can you get out of paying stamp duty?

If you sell your existing residence after purchasing a second home, in this case you can claim a refund on the stamp duty paid as long as you sell your original residence within three years. Talk with your solicitor or licensed conveyancer on how you can claim a refund in this case.

How is stamp duty calculated?

The way stamp duty is calculated is similar to income tax. It is payable on the amount greater than the threshold it falls within. Further, it becomes payable within 14 days after you complete the purchase of the property.

Instances where you do not have to pay stamp duty

No stamp duty is payable in the following instances:

  • If you are getting divorced and buying a second home in pursuance of a property adjustment order. Even if there is no such order in place, talk to your solicitor who will guide you on how to claim a refund if you sell your marital home within three years of moving out.
  • If you are inheriting a property, you do not have to pay stamp duty on such properties.
  • If you are buying a new or assigned lease of fewer than 7 years, as long as the amount you are paying is less than the minimum threshold.
  • If you are buying a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000.

What are the current rates of stamp duty?

The current rates at which stamp duty is payable in England & Northern Ireland, Scotland, and Wales are as below:

England & Northern Ireland

Price of Property

Stamp Duty Rate

Stamp Duty Rate for Additional properties.

Up to £500,000

0%

3%

Over £500,000 to £925,000

5%

8%

Over £925,000 to £1.5m

10%

13%

Over £1.5m

12%

15%

 

Scotland

Price of Property

Stamp Duty Rate

Stamp Duty Rate for Additional properties.

Up to £250,000

0%

4%

£250,000 to £325,000

5%

9%

£325,000 to £750,000

10%

14%

Over £750,000

12%

16%

 

Wales

Price of Property

Stamp Duty Rate

Stamp Duty Rate for Additional properties.

up to £180,000

0%

3%

£180,000 – £250,000

0%

6.5%

400,00 to £750,000

7.5%

10.5%

50,000 to £1.5m

10%

13%

Over £1.5m

12%

15%


For further guidance on stamp duty please visit  the page.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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