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Stamp Duty Land Tax is a tax that is paid on property and land sales in England. Many home buyers will want to avoid paying stamp duty, but that’s not an option unless you are a first-time buyer.

However, there are other options for buyers that might reduce their liability for stamp duty.

Paid on a sliding scale

First of all, let’s look at exactly what stamp duty is.

Stamp Duty Land Tax is a tax paid on a sliding scale. The current threshold is £125,000 for residential properties, meaning you won’t pay any duty on the first £125,000 of any property transactions.

For non-residential land and property, the threshold is £150,000.

In England, stamp duty relief is available to first-time buyers. They do not pay any tax on the first £300,000 of any property transaction.

Read Homeward Legal’s extensive guide to current stamp duty rates and exemptions.

Buyers in Wales can read more about the Land Transaction Tax, which is the Welsh Government equivalent of stamp duty.

Reducing stamp duty liability

Unless you’re a first-time buyer or your property’s value is below that threshold, you cannot avoid paying stamp duty.

Let’s look at some other options for reducing stamp duty liability.

Buying land with planning consent to build a home means paying less stamp duty than if you bought a ready-built house for the same cost.

Land cost is usually around 33 percent of the cost of land with a property already built on it.

This would mean you have saved around 66 percent of stamp duty liability that you would otherwise have had to pay.

Alternative options to avoid stamp duty

Another option for avoiding or reducing stamp duty is to buy shares in an owning company rather than buying the asset itself.

Some homes are owned by an offshore company rather than in an individual’s name. Remember there will be different tax liabilities relating to the company itself.

When buying a new-build home, you can negotiate a deal with the developer who may be willing pay the stamp duty costs or reduce the purchase price appropriately to guarantee a sale.

Strike a deal with the seller

Depending on how keen the property seller is to sell up, you can consider asking them to split the cost of the stamp duty with you.

Ideally this would involve them reducing the cost of the property proportionately.

In recent months, politicians have mooted the idea of switching liability for stamp duty from buyers to sellers, but there’s no sign of that happening any time soon.

Currently it is a serious criminal offence to evade or conspire to evade stamp duty.

So, if you’re buying a new home and you’re liable for stamp duty, the reality is you’re going to have to pay up.