Stamp Duty Calculator and Rates

Your Quick Guide to Stamp Duty Calculator and Rates

If you are buying or selling property, it is essential to know about stamp duty rates not to pay more than necessary. To help with this process, we have created an easy-to-read guide for how stamp duty rates are calculated & provide guidance on what you might need to know!
Stamp Duty Calculator and Rates

Stamp duty, or “stamp tax1,” refers to a government’s taxation on transactions of certain kinds. It may include the transfer of property in land and buildings, amongst other things.

In case you might be wondering,

It’s one of the most confusing and tedious tax responsibilities for any home buyer. Not only do you have to do the stamp duty calculation, but you also need to factor in whether it is a purchase or a sale.

Nowadays, it usually takes a percentage of the purchase price for vehicles and real estate purchases, though this varies by country. In England and Wales, you’ll need to pay stamp duty on top-priced items like properties over £125k and £250k if a second property.

There are also specific properties that have fixed rates of tax. These include second homes bought by residents or non-residents and agricultural land. In Scotland, where there is no distinction between residential and commercial property, all transactions attract an additional 0.25% in stamp duty.

First-Time Buyer Stamp Duty Rates

First-Time Buyer Stamp Duty Rates

In England and Northern Ireland, first-time buyers who spend up to £500,000 on a property do not pay stamp duty on the first £300,000 and pay 5% on balance between £300,000 and £500,000.

It gets better,

To qualify for the first-time buyer stamp duty relief, the homebuyer must be living in any property for at least four years. The income must not exceed £50,000 per annum, which doesn’t include other sources of income like rent or investments. Also, the law must be qualified (i.e., married), so if you’re unmarried, then there will be no exemption for you.

Home Mover Stamp Duty Rates

Home movers are subject to a lower stamp duty rate than second-home buyers. The government wants mortgages and plans to live in their new homes for more than three years to buy them, boosting economic growth.

Plus, since they will live there longer, they’re less likely to have problems paying off their mortgage.

On the other hand,

The maximum amount of transactions that qualify for this lower rate was increased from two properties per person/shared ownership property over four consecutive financial years, but only if both properties were bought within one year before or after each other. The rules about buying-to-let property still apply.

You must occupy the property yourself at some point during your ownership or buy it as a gift for someone who will occupy the property.

Buy-to-Let Stamp Duty Rates

Buy-to-Let Stamp Duty Rates

Like a second home and buy-to-let property, the additional property will be subject to a 3% Stamp Duty surcharge on top of the current rates for each band. This higher rate applies to properties purchased for £40,000 or more. Caravans, mobile homes, and houseboats are exempt.

Now:

If you’re buying a new primary residence but don’t sell your old one before the deadline, you’ll have to pay the higher Stamp Duty rates because you’ll have two homes.

Stamp Duty on Shared Ownership Properties

In recent years, shared ownership has become a more popular choice for people to buy their own homes. Shared ownership is when you purchase between 25% and 75% of the property at a discounted price in relation to market rates, then pay rent on the other share until it can be purchased outright or as part of an intermediate step before full completion.

The ability to spread costs over time makes this option suitable for those who are unable to afford upfront payments either because they have limited capital or require additional support from third-party housing providers.

However, buyers looking into buying with shared ownership should also consider stamp duty implications if purchasing through such schemes. Stamp Duty Land Tax (SDLT) applies differently depending on whether you’re buying all the shares in the property upfront or buying in stages.

Stamp Duty on Second Homes and Second Property

Stamp Duty on Second Homes and Second Property

If you’re buying a second home or second property in the UK, there are stamp duty implications that can have an impact on your ability to finance such purchases. For example, if you buy with shared ownership and do not complete all of the purchase upfronts, then it’s possible for SDLT rates to apply from day one.

Why is this so?

This is because when you buy a home in shared ownership, even though it’s split into different parts which can be bought at any time up to the end of the term, HMRC still counts this as one property.

Residential Property Stamp Duty Calculator

To help you work out how much stamp duty is applicable to your property purchase, HMRC has a handy residential property calculator. This will show the SDLT that applies for each band of price and what percentage it makes up in terms of total share value.

Let me show you

For example, if you are buying a £300k home with an actual cost to you of £240k, then you would be liable to pay SDLT on the entire purchase price (£300k) at a rate of three percent which will make up around 12.50% of your total share value (i.e., 240/3000).

Paying Stamp Duty

Paying Stamp Duty

Usually, your solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself. Within 30 days of completing the property purchase, you must file a Stamp Duty Land Tax return and pay any outstanding amounts.

HMRC2 can charge you penalties and interest if you do not file a return and pay the tax within 30 days. And if the cost of your new home is less than £125,000, you must still file a return unless exempt, even if no Stamp Duty is due.

Common Questions

How Much Stamp Duty Will I Pay on a 200k House?

How To Calculate Stamp Duty in the UK 2020?

What Is the Stamp Duty Threshold 2020?

How Much Is Stamp Duty on 500k House?

In Conclusion

But don’t only take my word for it,

If you’re not sure of which SDLT rates apply to your property purchase, please speak with an accountant or tax advisor for more information and assistance on calculating the rates that will apply to your situation.

Remember, other charges are associated with buying a house, such as conveyancing fees and solicitor’s costs, so make sure you factor these into the equation before deciding if it is worth undertaking any investment property. The important thing is to do some research beforehand and determine how much stamp duty may cost when investing in property.

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