What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is the tax that must be paid when you purchase a property or a piece of land in England and Northern Ireland. The amount of money required for stamp duty depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a First Time Buyer.
When do you pay stamp duty?
Stamp duty now needs to be paid within 14 days after completing on a property purchase. The 14 day period for submitting a stamp duty return has been effective from March 2019 and has been reduced from 30 days.
SDLT rates from 23rd September 2022 are as follows:
Less than £250k - Normal rate: 0% - Additional property: 3%
£250k to £925k - Normal rate: 5% - Additional property: 8%
£925k to £1.5m - Normal rate: 10% - Additional property: 13%
Rest over £1.5m - Normal rate: 12% - Additional property: 15%
(*An additional property purchased for less than £40k will attract 0% tax. For purchases from £40k to £250k the SDLT rate will be 3% on full purchase price).
First time buyers:
First time buyer relief is available for property purchases below specific thresholds. First time buyers will not pay any stamp duty on property purchases below £425,000 with further relief available for transactions up to £625,000.
Buy to let & second homes:
Stamp duty rates have increased for anyone purchasing an additional property. Additional property types include buy to let investments and second homes. Since April 2016 a 3% surcharge has been applied on top of the normal SDLT rate.
The higher stamp duty rates only apply to additional residential property. Land and other types of property are not normally considered when determining ownership of additional property for stamp duty purposes.
If a previous home is not sold immediately, stamp duty will be calculated at the higher rate and a refund may be claimed later.
A stamp duty refund can be claimed up to 12 months after selling a previous home as long as the old home is sold within 3 years of purchasing the new one. The 3 year time limit may be extended if the sale of the old home is delayed because of COVID-19 or other exceptional circumstances.
Replacing a main residence:
The higher rates of stamp duty should not apply when moving home. Normal rates of stamp duty will apply for anyone replacing a main residence even if they own two properties in the short term.
If a previous home is not sold immediately, stamp duty will be calculated at the higher rate and a refund may be claimed later. A stamp duty refund can be claimed up to 12 months after selling a previous home as long as the old home is sold within 3 years of purchasing the new one. The 3 year time limit may be extended if the sale of the old home is delayed because of COVID-19 or other exceptional circumstances.
Stamp duty for non-UK residents:
An increase to stamp duty for non-UK residents was announced in the 2020 Budget.
Since April 2021 someone living overseas could pay an additional 2 percent in stamp duty if they purchase a property in England or Northern Ireland. The increase in stamp duty means that for an additional property the top rate of SDLT will now be 17%.
The surcharge will apply to anyone who is non-UK resident including British expats based overseas. Someone who is not present in the UK for at least 183 days in the 12 month period leading up to buying a property will have non-UK resident status.