BUYING a property is an expensive business - and that's without factoring in all the additional costs that come along with it.
Stamp duty is one of the extra up-front payments that buyers may have to fork out for.
You may not have to pay the tax and the thresholds vary depending on the value of the property.
We have put together an explainer to help you understand what the tax is, who pays it, and how much you will need to pay.
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But here's everything you need to know for now.
Who pays stamp duty right now?
It is home buyers who pay for stamp duty, not the seller.
Usually, this is done through a solicitor on your behalf during the buying process.
As the home buyer, you have 14 days from the date of buying a property to file a Stamp Duty return to HMRC.
You can be charged penalties and interest if you don't within this time frame.
If you are buying a property that is more than the property thresholds listed above, you will need to pay stamp duty.
How much stamp duty will I pay?
The amount of SDLT you have to pay depends on the price of the home you are buying and the type of property it is.
If you buy a property for less than £250,000 there’s no stamp duty to pay.
If you are a first-time buyer no stamp duty is due if the property is worth £425,000 or less.
You'll also get a discount if the purchase price is £625,000 or less and will only pay 5% SDLT on the portion from £425,001 to £625,000.
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Those who aren't first-time buyers will pay different rates depending on the value of their new home:
- If it's up to £250,000 - no stamp duty is paid
- For the next £675,000 (the portion from £250,001 to £925,000) - stamp duty is charged at 5%
- For the next £575,000 (the portion from £925,001 to £1.5million) - stamp duty is charged at 10%
- For the remaining amount (the portion above £1.5million) - stamp duty is charged at 12%
For example, if you are buying a home worth £300,000 you would pay stamp duty at a 5% rate on the £50,000 - £2,500.
If you want to work out quickly how much stamp duty you will pay on a property, you can use an online calculator.
Two useful ones are found on www.moneyhelper.org.uk and www.stampdutycalculator.org.uk.
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