We know… it’s not fun. What’s the saying… death and taxes? It’s the inevitable that cannot be avoided. Taxes must be paid, and when you buy a property you are required to pay what is known as Stamp Duty Land Tax (or, stamp duty). So, let’s get down to the nitty gritty. Without wasting any time… here are some of the basics about what you need to know about stamp duty. For your own due diligence, though, check the HMRC website for any stamp duty updates.
Stamp Duty… What Is It?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.
The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
There are different rules if you’re buying your first home. You get a discount (relief) that means you pay less or no tax if:
you complete your purchase on or after 22 November 2017
the purchase price is £500,000 or less
you, and anyone else you’re buying with, are first-time buyers
You pay the tax when you:
buy a freehold property
buy a new or existing leasehold
buy a property through a shared ownership scheme
are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
How much you pay
How much you pay depends on whether the land or property is:
You can use HM Revenue and Customs’ (HMRC) Stamp Duty Land Tax calculator to work out how much tax you’ll pay.
You may be able to reduce the amount of tax you pay by claiming relief, such as if you’re a first-time buyer or purchasing more than one property (‘multiple dwellings’).
The value you pay SDLT on (the ‘consideration’)
The total value you pay SDLT on (sometimes called the ‘consideration’) is usually the price you pay for the property or land.
Sometimes it might include another type of payment like:
goods
works or services
release from a debt
transfer of a debt, including the value of any outstanding mortgage
Find out how to work out the consideration if your situation is complicated.
How and When To Pay
You must send an SDLT return to HMRC and pay the tax within 14 days of completion.
If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees. They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.
If they do not do this for you, you can file a return and pay the tax yourself.
There are certain situations where you do not need to send a return.
You may be charged penalties and interest if you do not file your return and make your payment within 14 days of completion.
And those are the basics about stamp duty. There… that wasn’t so difficult, was it? Was it? Here’s something to make you feel better.
