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What is Stamp Duty & Do I have to pay it?

What is Stamp Duty & Do I have to pay it?

The full name for Stamp Duty is ‘Stamp Duty Land Tax’.

If you buy property, or land, in England or Northern Ireland valued over a certain amount (the threshold), then Stamp Duty Land Tax is payable to HMRC within 14 days of the purchase completing. Similar taxes also exist in Scotland (Land and Buildings Transactions Tax) and Wales (Land Transaction Tax).

Stamp Duty Land Tax must be paid on non-residential land and property worth over £150,000.  For residential land and property, the threshold will be changing during the course of 2021.

During the Covid 19 pandemic, the British government raised the value above which Stamp Duty Land Tax was payable on residential land and property.  At the time of writing, Stamp Duty Land Tax is payable on residential land and property valued at over £500,000.

From 1st July 2021, Stamp Duty Land Tax will be payable on residential land and property valued at over £250,000.

On 1st October 2021, Stamp Duty Land Tax is due to change again, becoming payable on residential land and property valued at over £125,000.

How much is Stamp Duty Land Tax?

There are different rates of Stamp Duty Land Tax payable on residential land and property depending on whether you are a first-time buyer, you already own a property and are buying an additional property, or if you are not a UK resident.

Stamp Duty Land Tax can be calculated using HMRC’s online calculator:

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/

You can find a breakdown of Stamp Duty Land Tax rates for residential land and property here: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

And a breakdown of Stamp Duty Land Tax rates for non-residential land and property can be found here: https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-rates

Do I have to Pay it?

From 1st July 2021, if you are a first-time buyer you will get a discount, which means you will pay less or no tax if:

  • you, and anyone else you’re buying with, are first-time buyers AND
  • the purchase price is under £500,000

A solicitor will be able to file your Stamp Duty Land Tax return and arrange payment of the tax on the day that a land or property purchase completes. They will also claim any relief you are eligible for.

There are certain situations where you do not need to send a return and your solicitor will also be able to advise of these.

Please note that you may be charged penalties and interest if you do not file your Stamp Duty Land Tax return and make your payment within 14 days of the land and property purchase completion.

As experts in property and conveyancing, we can help your property purchase go smoothly and efficiently and ensure all required taxes are paid at the correct rate and on time. If you’re looking to purchase a property, call RDC Solicitors today on Bradford 01274 735 511, Bingley 01274 723 858 or Ilkley 01943 601173.

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