How do I pay stamp duty?

Posted on Friday, July 19, 2019

Stamp duty is a major cost when you’re buying a property. Take a look at our blog to find out more about it, how much you can expect to pay and how you can pay it.

The official name for stamp duty is Stamp Duty Land Tax (SDLT), and this applies if you buy a property or land over a certain price in England and Northern Ireland. There are exceptions and additional duties to pay depending on whether this is your first ever home or the purchase of additional property, a second home, and a scale applied to the amount you have to pay related to the value of the property. 

When do you pay stamp duty?

You start paying stamp duty when you buy a property over £125,000. Only the person buying pays the stamp duty, not the seller. 

The limit of £125,000 does not apply if you are purchasing a second home, as the stamp duty here (plus an additional stamp duty rate of 3%) is levied on properties worth over £40,000. 

One exception is for first time buyers. First-time buyers, and first-time shared ownership purchases, do not have to pay stamp duty on properties worth up to £300,000. This applies if you have never owned a residential property before, inherited a residential property or owned a property abroad. You also have to be purchasing a home that you intend to live in and for less than £500,000.

How much stamp duty do I pay?

The residential property rates, set by the Government, are as follows

Property or lease premium or transfer value

SDLT rate

Up to £125,000

Zero

The next £125,000 (the portion from £125,001 to £250,000)

2%

The next £675,000 (the portion from £250,001 to £925,000)

5%

The next £575,000 (the portion from £925,001 to £1.5 million)

10%

The remaining amount (the portion above £1.5 million)

12%

 The government gives this example to help you. If you buy a house for £275,000, the SDLT you owe is calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £25,000 = £1,250

Total SDLT = £3,750

Although stamp duty doesn’t apply to removable fixtures, carpets or curtains, it does apply to fixtures and fittings like bathroom and kitchen fittings, and built in wardrobes. You can reduce your stamp duty by taking away the value of carpets, etc from the total price you are going to pay. We would advise speaking to your solicitor or conveyancer for more information on this. 

How do I pay stamp duty?

Your solicitor will usually pay the stamp duty on your behalf. It’s part of the purchase process. Your solicitor or conveyancer will usually calculate the stamp duty bill, submit your return and pay the stamp duty on completion day, having collected the money from you in advance. If you’d like to include the amount as part of your mortgage agreement, speak to your lender or bank beforehand. They can also help you calculate how much you will owe. 

If you will be paying the stamp duty yourself, it’s a relatively easy process. After you complete on your purchase of a property, you need to file a return to HMRC and pay any stamp duty that is due, within 14 days.

If you are looking to buy a property, talk to us today to see how we can help you in Langley, Reading, Slough and the surrounding areas.