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A Guide to Stamp Duty Tax for UK Homebuyers


Contributed by Sussex SEO
April 3, 2019



When purchasing property in the United Kingdom, you may be required to pay an additional tax known as Stamp Duty Land Tax, often shortened to just stamp duty. This must be paid within 14 days of your home purchased and is often handled by whoever is facilitating your home purchase, such as a conveyancer.

How Much Stamp Duty Do I Pay?

This depends on the price of the property and also whether it's your first home. If you're a first-time homeowner, then your rates are lowered to the following:

  • 0% up to GBP300,000
  • 5% between GBP300,001 to GBP500,000

Example: A home that costs GBP334,000 will cost a total of GBP1,700 in stamp duty

  • 5% of GBP34,000 (GBP1,700)

Any property that exceeds the value of GBP500,000 will not make you exempt from paying stamp duty and you will need to pay the standard rates listed below.

  • 0% under the first GBP125,000 (including shared ownership properties if the share is under this value)
  • 2% on property priced between GBP125,001 and GBP250,000
  • 5% on property priced between GBP250,001 and GBP925,000
  • 10% on property priced between GBP925,001 and GBP1,500,000
  • 12% on property priced GBP1,500,001 and over

Example: A home that costs GBP840,000 will cost a total of GBP32,000 in stamp duty

  • 2% of GBP125,000 (GBP2,500)
  • 5% of GBP590,000 (GBP29,500)

However, if you are purchasing a second home (such as a holiday home) or buying to let, then an additional 3% is added on top of each bracket, resulting in the following rates:

  • 3% under the first GBP125,000
  • 5% on property priced between GBP125,001 and GBP250,000
  • 8% on property priced between GBP250,001 and GBP925,000
  • 13% on property priced between GBP925,001 and GBP1,500,000
  • 15% on property priced GBP1,500,001 and over

Example: A buy-to-let home that costs GBP573,000 will cost a total of GBP35,840 in stamp duty

  • 3% of GBP125,000 (GBP3,750)
  • 5% of GBP125,000 (GBP6,250)
  • 8% of GBP323,000 (GBP25,840)

Even if you are in the process of selling your existing property, you will still be forced to pay the additional 3% stamp duty. However, if you're able to sell your home within 18 months of buying your new property, you will be eligible to reclaim the additional 3%.

Stamp Duty for Mixed-Use Properties

You may qualify for a lower stamp duty rate if your property is considered to be mixed-use. It must share elements of a residential and non-residential property, such as the following:

  • Agricultural land
  • Commercial property
  • Forests
  • Apartments connected to a store

If your property counts as mixed-use, then you'll pay the following lowered rates:

  • 0% under the first GBP150,000
  • 1% on property priced between GBP150,001 to GBP250,000
  • 3% on property priced between GBP250,001 to GBP500,000
  • 4% on property priced GBP500,000 and over

The exact amount you have to pay can be frustrating to calculate, so it's best to use a stamp duty calculator to work out how much you have to pay. Not only will it show you how much you need to pay depending on the value of the property you plan to purchase, but also give a detailed breakdown of how much you'll pay in each bracket.

References and sources:

https://www.myerssolicitors.co.uk/new-stamp-duty-rules-explained/

https://www.lendingexpert.co.uk/stamp-duty-calculator/

 

Tags: stamp duty | Property Investment | United Kingdom

 

 

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