How stamp duty works
Stamp duty is a tax that’s charged when you buy a property in the UK, but you’ll only need to pay it if the price of that property reaches a certain threshold.
Stamp Duty: The basics
What is stamp duty?
Stamp Duty Land Tax (SDLT) is a tax in England and Northern Ireland. It usually applies to residential properties, or pieces of land, that cost more than £125,000.
Scotland and Wales have their own taxes that are equal to stamp duty.
- Land and Buildings Transaction Tax (LBTT) in Scotland
- Land Transaction Tax (LTT) in Wales
How and when to pay stamp duty
You have to pay your stamp duty within 14 days of your move in date. If it’s not paid by then, you could risk a fine, or having interest added to the amount due. Often your solicitor deals with your stamp duty payment. It can help to know what stamp duty is, how it’s calculated, and when it’s due.
You pay stamp duty as a lump sum on new properties, second homes, freehold and leasehold properties. It does not matter if you buy the home with a mortgage or with cash.
How much is stamp duty in 2021 and 2022?
The stamp duty rates for the 2021 to 2022 tax year are currently the same as the stamp duty rates in 2020. Stamp duty rates across England, Wales, Scotland and Northern Ireland usually change at the start of April. Stamp duty usually stays the same for the entire tax year, which runs from the start of April to the end of March.
This year stamp duty has been a bit different as there have been stamp duty holidays in all four nations. The stamp duty holiday is different, depending on if you’re buying in England, Wales, Scotland or Northern Ireland.
The full stamp duty holiday ended on 30 June 2021 in England, Northern Ireland and Wales. It ended on 31 March 2021 in Scotland.
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YOUR HOME (OR PROPERTY) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE, OR ANY OTHER DEBTS SECURED ON IT.
Stamp duty for different property types
Calculating stamp duty on second homes is different. For second homes, you’ll have to pay an extra 3% on the standard stamp duty rates. This is for properties over £40,000 but does not include mobile homes, houseboats, and caravans. If you’re buying a new home and selling your old one, you’ll only need to pay the standard stamp duty rates.
If you do not sell your main property when you complete your new home, you’ll have to pay the higher rates. This is because you’ll own two properties. You can get a refund once you’ve sold your original home as long as it’s within 36 months of when you first bought it.
Stamp duty applies on both leasehold and freehold properties. It is dealt with exactly the same way on either property.
Calculating stamp duty on land and non-residential property is also different. This includes mixed-use land and property. You’ll pay land tax on transactions over £150,000. This is currently 2% of the property value from £150,000 to £250,000 and 5% on the value above £250,000.
If you’re a first-time buyer of a shared ownership home, you do not have to pay stamp duty on the first £300,000 of a home worth up to £500,000. This means all first-time buyers with a first home worth up to £300,000 is now exempt from stamp duty.
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