If you’re considering buying a house, there are several things to consider. While the obvious factors include mortgages and deposits, other costs such as stamp duty tend to fall under the radar.
You may have heard of the famous ‘stamp duty holiday’ during the pandemic, where the Government applied a cut to stamp duty rates in England and Northern Ireland. However, this ended on 1st October 2021.
Here’s what you need to know about stamp duty today.
What is stamp duty?
In short, stamp duty is a tax that needs to be paid when you buy a property. It applies to properties in England and Northern Ireland. It’s called Land and Buildings Transaction Tax in Scotland, and in Wales, it’s known as Land Transaction Tax. Stamp duty applies to both freehold and leasehold.
How much is it?
The amount of stamp duty you need to pay is worked out using the purchase price of a property. It isn’t based on the amount you’re borrowing.
Stamp duty thresholds exist as limits to these charges. Some properties will fall below the base threshold, in which case, you won’t need to pay stamp duty. However, if it exceeds other thresholds, the amount you pay will rise. There’s a first-time buyer relief if you qualify.
The value of the property will dictate the amount you pay. Here’s a guide to what you’ll pay:
- 0% stamp duty on a purchase price of up to £250,000 (or £425,000 for first-time buyers)
- 5% stamp duty on a purchase price between £250,001-£925,000
- 10% stamp duty on a purchase price between £925,001 and £1,500,000
- 12% stamp duty on a purchase price of £1,500,001 or above
These figures are based on main residence properties, as opposed to second home properties, where the percentages will be higher.
How to pay
Conveyancing is a legal term that’s used for transferring the ownership of a property, whether buying or selling. This means they can help you get a handle on the logistics around stamp duty and other legal processes involved when buying or selling a property. You’ll be able to ask questions about any concerns you have around stamp duty and more.
A conveyancer can help with legal advice, handling contracts, dealing with the Land Registry and more. It’s worth taking your time to choose a service you feel you can rely on. Buying a house can be hectic and demanding, so having someone you can count on will help you through the process.
Second homes
As mentioned, the stamp duty on a second property will be higher compared to that of your main residence. You can expect to pay an additional 3% on top of standard stamp duty rates.
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