The Stamp Duty holiday is over - so what now?

Stamp Duty - how much will you now be paying?

The Stamp Duty holiday was brought in by the government during lockdown to encourage the housing market to ‘keep on moving’.  It certainly did that, fuelling huge demand from buyers for property nationwide.  Initially the first £500,000 of any purchase was Stamp Duty free then from July to September this year buyers had reduced rates of Stamp Duty to pay.

Now that’s all changed as from 1^st October the Stamp duty holiday has been phased out so we’re reminding home buyers to budget for this cost when buying a new property.  Whether you’re buying your first home, you’re a home mover or even buying a second property, you need to know how much Stamp Duty costs and when you need to pay it.

What is Stamp Duty?

Stamp Duty (officially called Stamp Duty Land Tax) is a levy that you pay to HM Revenue & Customs when you buy a property.  It is paid by the person buying a property and how much stamp duty you’ll pay depends how much you are paying for it and whether or not it is your only property.

Who pays Stamp Duty?

It is the home buyer who pays the Stamp Duty not the seller.  Usually your solicitor will pay it on your behalf as part of the purchase process.

How much is Stamp Duty?

The rate you pay depends on what price threshold your property purchase falls into and where the property is – there are different rates in Scotland and Wales compared to England and Northern Ireland.  It also depends on whether you have to pay a surcharge because you are purchasing a buy-to-let or second home.

The rates in England (and Northern Ireland) from 1^st October 2021 no Stamp Duty will be paid on the first £125,000 of the property’s value.  First-time buyers pay no Stamp Duty on the first £300,000 of the property’s value – more information can be found below.

If you are buying an additional property, then you pay 3% at the lowest band (and higher rates above this value), see the tables below for full details.  If you are a non UK resident, you also pay a 2% surcharge.

Stamp duty rates in England and Northern Ireland from 1^st October 2021

Purchase price of property	Stamp Duty rate	Stamp Duty rate for additional properties
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%

Do I qualify for first-time buyer Stamp Duty relief?

First-time buyers in England (and Northern Ireland) do not pay Stamp Duty up to £300,000 and pay 5% on the portion from £300,001 to £500,000.  There is no relief on properties over £500,000.  You are eligible if you and anyone else you are buying with are first-time buyers.  Also remember first-time buyer relief only applies if you are buying a property you intend to live in yourself and not on a buy-to-let, although you can let out spare rooms in your house and still get the relief.

I inherited a house, am I a first-time buyer?

No – sorry!  You own the house you inherited so no longer classed as a first-time buyer despite the fact you’ve never actually purchased a property.

I own a share of another property, does that stop me being a first-time buyer?

If you name is on the title deeds of another property even if you don’t own 100% of it, you don’t qualify as a first-time buyer.

Can I use my Help-to-buy ISA bonus to pay my Stamp Duty bill?

Yes you can.  Tell your solicitor that you have a Help-to-buy ISA and once you’ve agreed a completion date they can submit your bonus request.  It is then paid to your solicitor who will deduct it from what you owe for the property.

What is the Stamp Duty surcharge on additional properties?

Since April 2016 there has been a Stamp Duty surcharge for anyone buying additional properties.  If, at the end of the purchase process, you will own two or more properties then you have to pay a surcharge on top of your ordinary Stamp Duty bill.

What Stamp Duty rates apply to leasehold homes?

In most cases you will pay Stamp Duty on the purchase price of a leasehold home at the standard rates.  However, if you are buying a brand new property which has a new lease, or an older property that has just been divided up and therefore new leases have been issued (known as unassigned leases), you may need to pay an additional charge.  HMRC has a calculator on its website which you can use if you think this charge might apply to your purchase.

Are there any other exceptions?

There are a number of other Stamp Duty exceptions including:

-          Properties worth less than £40,000 are exempt from Stamp Duty.

-          Homes that are registered to companies rather than individuals and cost more than £500,000.  These have a Stamp Duty rate of 15%.

-          Charities may be able to get relief from Stamp Duty when they buy land and property for charitable purposes.

-          Right-to-Buy transactions may qualify for discounts.

-          Registered social landlords may be able to get relief if they are buying land or property.

-          Zero-carbon homes (including flats) under £500,000 are exempt.  Ones worth over £500,000 have their bill reduced by £15,000.

-          A full list of Stamp Duty exemptions and reliefs are listed on the HMRC website.    

When do I pay Stamp Duty?

Stamp Duty is due 30 days after you complete on the purchase of your home.  That’s the day you get the keys to your property.  Your solicitor or conveyancer should handle it all for you, submitting a return to HMRC on your behalf, collecting what is owed from you prior to completion then paying the taxman on completion day.  You should speak to your solicitor or conveyancer to ensure they are handling your Stamp Duty bill.
 

Use the HMRC’s Stamp Duty Calculator https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro to accurately confirm how much Stamp Duty you will be paying on your purchase or ask your solicitor or conveyancer to confirm.

 

Stamp Duty rates quoted are for property purchases in England only.  For purchases in Wales and Scotland buyers should make their own enquiries.  This article is a brief summary of Stamp Duty rates and related information and Beadnall Copley cannot be held responsible for any changes to Stamp Duty rates or the information listed herein and buyers should make their own enquiries to ensure that any calculation is correct and they are able to proceed with any purchase.