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Stamp Duty: Who pays it? When? And how much?

If you’re purchasing a property over a certain amount, you will need to pay stamp duty, also known as Stamp Duty Land Tax (SDLT). Our handy guide tells you all you need to know about how stamp duty works, the latest rates and how to pay it.

 

What is stamp duty?

 

Stamp duty is a tax that you need to pay to HMRC when you buy a property in England.

The amount paid varies depending on numerous things, including the property's purchase price and the buyer's circumstances.

It is applicable to both residential and commercial properties, including buy-to-lets.

Last year (2023), the average stamp duty bill for homebuyers was £10,000, so you must plan ahead for it as it can have a significant impact on the overall cost of purchasing a property.

 

How much is stamp duty?

 

Stamp duty is divided into several bands, with different thresholds for each band. The tax is only payable on the portion of the property price that falls within each band.

Here’s how much you’ll pay if, after buying the property, it is the only residential property you own:

• Nothing on the first £250,000

• 5% between £250,001-£925,000

• 10% between £925,001 and £1.5 million

• 12% above £1.5 million

 

Stamp duty for first-time buyers

 

If you are buying your first home, you can claim a discount so you won’t need to pay stamp duty for property purchases up to £425,000.

This means you’ll pay:

• Nothing on the first £425,000

• 5% between £425,001 to £625,000

If the price is over £625,000, you cannot claim the relief. 

 

Stamp duty on second homes

 

If you’re buying an additional property, also known as a second home, that is not your main place of residence, you will need to pay an additional charge.

For example, if you are buying a buy-to-let property, you will be charged an extra 3% on top of the standard stamp duty rates. This is because you own two properties.

You can apply for a refund if you sell your previous main home within three years.

 

Is it possible to add stamp duty to a mortgage?

 

Yes, you can add your stamp duty payment to your mortgage but it's important to note that this will incur interest over the duration of the mortgage term, and will also affect your loan to value ratio (LTV). It is cheaper to pay up front if you can.

 

When and how do I pay stamp duty?

 

You have 14 days from the date of completion to pay any stamp duty due. 

If you have a solicitor, they’ll usually file your return and pay the tax on your behalf on the day of completion. 

If they do not do this for you, you can file a return and pay the tax yourself but be warned you may be charged penalties and interest if you do not file your return and make your payment within 14 days of completion.

 

Thinking about selling a property?

 

Gooding & Co are award-winning, independent property experts in Reading and the surrounding areas.

We're here to help you every step of the way, from valuation to viewings and sale negotiation.

Book your FREE, no obligation valuation today - 0118 987 1066 or use our instant online valuation tool: https://tinyurl.com/Instant-Online-Valuation