Articles | Thomas Taggart & Sons, Solicitors, Ballymoney STAMP DUTY: KEY FACTS
STAMP DUTY: KEY FACTS

STAMP DUTY: KEY FACTS

- by Keith Dunn

Stamp duty – or, more precisely, Stamp Duty Land Tax – is a tax homebuyers pay when they purchase land or property. It must be paid within 30 days of completing the property purchase and it cannot be added to a mortgage to allow it to be paid off in instalments.

Your solicitor will usually be responsible for filing your stamp duty return with the Inland Revenue upon completion.

The amount of stamp duty to be paid increases in line with the value of the land or property being bought. New rules implemented in April 2016 means higher rates apply when purchasing an additional home.

 

Stamp duty payable on first homes

If you are purchasing your first home, and the purchase price is £125,000 or less, then you have no stamp duty to pay. Thereafter the rates are as follows:

Purchase price

Rate of stamp duty

The portion from £125,001 to £250,000

2%

The portion from £250,001 to £925,000

5%

The portion from £925,001 to £1.5 million

10%

The portion above £1.5 million

12%

 

So, if you purchase a house for £275,000, the stamp duty payable will be £3,750 (0% on the first £125,000, 2% on the next £125,000 and 5% on the final £25,000).

 

Stamp duty payable on second or additional homes

From April 2016, if you purchase a property which is not going to be your main residence you need to pay a higher rate of stamp duty. This higher rate applies to:

- buy-to-let properties

- holiday homes

- properties purchased for investment purposes

It can also apply if you purchase an additional property to replace your existing home without selling your existing home first (however you can apply for a refund if you sell your existing home within three years).

Depending on the nature of the transaction, it can also apply when a parent buys a property for their child. In this situation it is important to take good legal advice as there are legal ways to avoid this.

The rates for additional property purchases are as follows:

Purchase price

Rate of stamp duty

£0 – £125,000

3%

The portion from £125,001 to £250,000

5%

The portion from £250,001 to £925,000

8%

The portion from £925,001 to £1.5 million

13%

The portion above £1.5 million

15%

 

So, if your additional property costs £100,000, the stamp duty payable will be £3,000. If it costs £200,000 you would pay £7,500 (3% on the first £125,000 then 5% on the next £75,000).

 

Calculating stamp duty

The government has produced a stamp duty calculator which can help you quickly calculate the exact amount you will have to pay. You can find the calculator here: Stamp Duty Calculator.

You can also contact us and we will be able to give you a complete breakdown of all the outlays, including stamp duty, which you will need to pay as part of your intended property purchase.

 

Exemptions

There are a number of instances when stamp duty will not be payable regardless of the purchase price or whether it is a first or additional home.

For example, if the purchase price of the property is under £40,000 then you won’t need to pay any stamp duty at all.

You also don’t need to pay stamp duty if the property you are purchasing is “non-residential” or “mixed-use” (i.e. a flat with a shop downstairs).

Exemptions may also apply if you inherit the property, if you hold the property as part of a partnership or as a beneficiary of a trust, if you are purchasing land from a neighbour or if you are going through a divorce. If any of these situations apply to you then you should contact us so that we can take some details from you to determine if stamp duty will be payable by you.


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