What is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a tax you pay as a lump sum when you buy a house and was introduced in December 2003.
The SDLT thresholds will change during this period to:
- £250,000 for residential properties.
- £150,000 for non-residential land and properties.
- £300,000 for first-time buyers.
- £125,000 for residential properties.
- £150,000 for non-residential land and properties.
- £300,000 for first-time buyers.
The Stamp Duty Land Tax rate and the amount you pay varies firstly according to whether the land or property is residential or non-residential and mixed use.
But you'll only pay that sliding scale rate for the proportion of the property price that’s inside that band, according to these rules for freehold sales:
- Up to £500,000: Zero.
- Over £500,000 and below £925,000: 5%.
View the Government's Stamp Duty Land Tax calculator to work out what your SDLT could be if you were to complete on a property over £500,000 between 8th July 2020 and 30th June 2021.
When you buy a new home you submit a Stamp Duty Land Tax return to HMRC and pay what you owe within 30 days of completion. If it’s not paid, you’ll be charged a £100 penalty plus interest. Usually your solicitor will deal with the stamp duty return and payment for you but it is best to double check with them whether they are dealing with it or not.
If the purchase price is below £125,000, or you are a first time buyer purchasing a property up to £500,000, you still need to submit a return even though you won’t need to pay any stamp duty, again this will usually be dealt with by your solicitor.
There are some circumstances in which stamp duty is either not payable or can be legitimately reduced.
Transfer some of your home’s value. This only applies if you’re divorcing or separating from your spouse or partner but there’s no stamp duty to pay if you transfer a proportion of your home’s value to them.
Transfer the deeds of your home to someone else – either as a gift or in your Will – they won’t have to pay stamp duty on the market value of the property. However, if you exchange properties with another person, you’ll each have to pay stamp duty on the property you receive based on its market value. Visit the gov.co.uk website for more on this and other situations where stamp duty may not be payable.
Remember to factor in any potential SDLT alongside your savings for your deposit and other moving costs. Why not visit our range of savings accounts to see if there is something suitable for your next home savings?