Having made headlines recently, it seemed like a good time to discuss the intricacies of Stamp Duty Land Tax. With such a high profile case in the news it’s important to know why, when, and most importantly how much tax is to be paid on property purchases.
For the sake of this article, we will concentrate on residential property purchases in England, as there are differing rates of Stamp Duty payable on non-residential property in different parts of the UK.
Stamp Duty Land Tax is an additional tax payable on the purchase of a property or area of land and during the financial year 2023-24 was responsible for raising £8.6 billion in revenue for the Government through residential property purchases. This tax is payable within 14 days of the completion of a house purchase and is normally handled by the conveyancing solicitor who is acting on your behalf.
The real confusion comes with how much tax you have to pay. There was a significant change in Stamp Duty payment scales at the end of 2014, however, there have been amendments and holidays in the intervening years – especially during the Covid years, where a stamp duty holiday was implemented to help drive the market, leading to significant house price rises and extremely high levels of property sales.
As things currently stand Stamp Duty Land Tax is payable across 5 different sections of a purchase price.
- From £0 - £125,000 there is no Stamp Duty payable, meaning any property purchase up to £125,000 is free of Stamp Duty.
- From £125,000 - £250,000 there is a 2% Stamp Duty charge on a purchase. This means that if you buy at a level of £250,000 you pay 0% on the first £125,000 and 2% on the next £125,000 (£2,500).
- From £250,000 - £925,000 there is a 5% tax charge
- From £925,000 - £1.5 million there is a 10% charge.
- For those of us lucky enough to be buying over £1.5 million then you pay a charge of 12% on anything above that level.
Complex, isn’t it? It gets more confusing. If you are buying a second home there is also an additional Stamp Duty charge of 5% of the entire purchase price. This is the section that has been in the limelight recently. If you are a first time buyer there is no Stamp Duty payable on the first £300,000.
The best piece of advice is to talk to a conveyancing solicitor. Poole Townsend has several qualified legal conveyancing solicitors happy to speak to you. You wouldn’t want to be headline news for a Stamp Duty mistake, would you?!