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What is Stamp Duty? And How Much Will it Cost Me?

Phi Spencer

By Phil Spencer

The costs of buying a home are not insignificant. So it’s always worth understanding what you’re paying beforehand. So, what is stamp duty? Moreover, how much will it cost you? We’ll explain this fully so you can work out your home buying budget with accuracy.

What is stamp duty?

Stamp duty land tax is a tax you have to pay in England, Wales or Northern Ireland for a property, or piece of land, over the price of £125,000. It is applicable to all properties, both freehold and leasehold, whether you’re paying outright for your home or if you’re taking out a mortgage.

Stamp duty for first-time buyers

During the Autumn Budget 2017 it was announced that first-time buyers would be exempt from paying stamp duty for properties under £300,000. First-time buyers purchasing a property up to £500,000 will only need to pay 5% tax on the portion of the purchase price only.

How much is stamp duty?

Stamp duty varies on an increasing scale and is calculated based on the proportion of the value in each tax bracket.  

Who has to pay stamp duty?

Only the buyer pays stamp duty, not the seller. Every buyer has to pay stamp duty if their property or land is valued over £300,000.

What does stamp duty apply to?

You don’t pay stamp duty on any removable fixtures and fittings that come with your house. It’s only calculated on the fixed items such as bathrooms, kitchens or built-in wardrobes.

Fixtures and fittings could be an opportunity to reduce your stamp duty bill. First, decide with the seller (before the exchange) the exact cost of all removable fixtures and fittings included in the costs of the sale. If this is queried by HMRC, you need to be able to justify how you reached the exact figure when calculating what you owe.

When does stamp duty not apply?

HMRC has produced a full list of stamp duty reliefs and exemptions which offer clarity on when stamp duty may not apply. Here are the key points mentioned:

  • You may be eligible for stamp duty relief if you are buying your home under the Right to Buy scheme
  • You don’t have to pay stamp duty if:
    • No money exchanges hands
    • You inherit the property

How do I pay stamp duty?

Your conveyancer or solicitor should manage this as part of the completion process so be sure to raise any specific queries with them.

It’s the buyer’s obligation to submit a stamp duty tax return within 30 days of being eligible to take ownership of a property. Even if you’re exempt from paying, you’re still required to submit a return. Failure to complete a return could result in penalties being applied by HMRC.

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