Depending on the value of your new home, you may have to pay a government tax called Stamp Duty Land Tax (SDLT). Stamp Duty is applicable in England for homes that cost more than £250,000.
Scotland also has a government tax, the Land and Buildings Transaction Tax (LBTT), which comes into force when your new home costs more than £145,000.
Understanding Stamp Duty
Stamp Duty is collected to reflect the work that goes into changing the land ownership of your property from the developer or previous property owner to you. All land needs to be legally registered with the Land Registry. To complete the Land Registry process requires a certificate from HMRC, which is what the fee from the Stamp Duty pays for. This is a piece of background work that is completed by your solicitor as part of your house purchase and something you do not have to initiate yourself. A stamp duty return must be submitted (unless exempt), even if you won’t need to pay any Stamp Duty.
How much is Stamp Duty?
In England the Stamp Duty rates increase on a sliding scale based on the price of the property being purchased, unless you are a first-time buyer purchasing a home with a value lower than £625,000, where an exemption or reduced rate applies.
| Purchase Value | Stamp duty rates |
|---|---|
|
Up to £250,000 |
0% |
|
£250,001 to £925,000 |
5% |
|
£925,001 to £1.5 million |
10% |
|
£1.5 million+ |
12% |
The above rates apply for a single residential property. You usually pay 3% on top of these rates if you own another residential property.
First-time buyers
If you are a first-time buyer (or anyone you are making the purchase with is), you will pay no SDLT on the purchase of your first home if the price is £425,000 or less. For properties costing up to £625,000 you will not have to pay any Stamp Duty on the first £425,000, however, a 5% Stamp Duty will apply on the portion of the property's value from between £425,001 to £625,000.
For example, if you are a first-time buyer and buy a house for £500,000, the Stamp Duty you owe will be calculated as follows:
0% on the first £425,000 = £0
5% on the next £75,000 = £3,750
Total Stamp Duty to pay = £3,750
If the property price is over £625,000, you do not qualify for any exemption, and will therefore need to follow the rules for people who have bought a home before.
You can use the government SDLT Calculator to work out how much tax you’ll pay. Alternatively, if you would like to speak to an experienced member of our sales team, email us on Enquiries@beechgrovehomes.co.uk.