If you are thinking of buying a house, Stamp Duty Land Tax (SDLT) could be one of the major costs that you need to consider. However it is not always payable on all properties or for all buyers. For example, did you know that there are different rules if you are buying your first home and the purchase price is £500,000 or less?
Who pays stamp duty land tax?
SDLT is payable for all residential properties over £125,000 and non-residential land and properties over £150,000. The cost is payable by the buyer and so needs to be factored into your budget when buying a new home.
First Time Buyers
There are different rules if you are buying your first home. To be eligible you, and anyone else you are buying with, must have never owned a property in the UK or abroad, or inherited a residential property.
If you qualify, you get a discount so that you do not pay any tax on properties up to £300,000.
On properties up to £500,000, you pay a 5% charge on the portion between £300,000 and the purchase price.
If the property costs over £500,000, unfortunately you can’t claim the relief and you have to follow the rules for people who have bought a home before.
Second home
You should also note that if you are buying a second home, there is an additional 3% rate on all properties over £40,000.
Are SDLT costs the same throughout the UK?
SDLT is only payable in England and Northern Ireland. In Scotland, you have to pay something called Land and Buildings Transaction Tax, whilst in Wales it is called the Land Transaction Tax.
How much is SDLT?
The tax rates depend on how much the property costs. If you want to work out how much stamp duty you will have to pay, it might be easiest to use a stamp duty calculator.
http://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/
| Property Price | SDLT rate | SDLT rate for additional properties |
| The portion up to £125,000 | 0% | 3% |
| £125,001 to £250,000 | 2% | 5% |
| £250,001 to £925,000 | 5% | 8% |
| £925,001 to £1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
How to calculate the stamp duty
So, for example, if you bought a property for £850,000 you would pay no stamp duty on the first £125,000, then 2% on £125,000 to £250,000 and 5% above £250,000.
0% on £125,000 = £nil
2% on £125,000 = £2,500
5% on £600,000 = £30,000
Total SDLT = £32,500
If you would like to discuss any of this further then please get in touch on 0116 2423400 or info@torrwaterfield.co.uk
Alex Frow – Accounts & Tax
Torr Waterfield - Accountants & Business Advisors 