Stamp Duty and the Cost of Buying A Home
Jun 2, 2015
In a surprise Autumn Statement last year the Chancellor, George Osborne, cut stamp duty for 98 per cent of home buyers, but what does this really mean for you when you buy your property?
Stamp Duty Land Tax, to give it its proper name, is a tax paid when buying a house in England, Wales and Northern Ireland and in some circumstances on a commercial or mixed use property. Scotland has its own system called Land and Buildings Transaction Tax and different rules apply.
The old system was a stepped approach based on the value of your home, but the new system is a more gradual increase, apart from people buying property over £1.5 million, who will now pay 12 per cent on everything above this figure.
The figures now look like this:
- No stamp duty for the first £125,000
- 2 per cent between £125,001 and £250,000
- 5 per cent between £250,001 and £925,000
- 10 per cent between £925,001 and £1.5m
- 12 per cent on everything else
This was a move to try to help people in London and the South East, where property prices had increased by nearly 140 per cent since 2000 and where large sums of money were going to HM Revenue and Customs’ (HMRC) as a result.
When purchasing a property, you will need to calculate the cost of your Stamp Duty Land Tax (SDLT) and factor this into the purchase price. HMRC has a calculator for you to use so you can work out what you will need to pay and you can find it here http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Once your purchase is completed, you will need to settle the SDLT with HMRC within 30 days of completion. Usually, your solicitor will file the required tax return and pay the money for you when the complete your purchase. However, if they do not do this for you, it is your responsibility to ensure that you file your return and pay the money owed. HMRC will charge you interest and fine you if you do not pay on time.
Don’t get caught out when buying a property as it can be easy to forget the stamp duty element. If you would like advice on the house buying process, stamp duty or any other element of property purchases, please call Christopher Taylor on 01264 325815 or email firstname.lastname@example.org. Chris will be happy to talk you through it.
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