15 Nov, 2017/ by Homeward Legal /First Time Buyer
Stamp duty - or, as it's officially known, Stamp Duty Land Tax (SDLT) - is a charge levied on property sold over a certain amount in England and Wales. The current thresholds are over £125,000 for residential property, over £150,000 for non-residential land and property. News just in: check out the new Stamp Duty chart for First-Time Buyers November 2017.
This lump sum payment must be paid regardless of whether you're buying freehold or leasehold or through shared ownership. However, first-time buyers purchasing a property valued up to and including £300,000 are now exempt from paying the duty in England, Wales and Northern Ireland. First-time buyers purchasing a property valued up to £500,000 in London and the other most expensive areas of the country will also be exempt from paying stamp duty on the first £300,000 of the transaction.
Stamp duty was reformed in 2016 when a new regime was introduced. Previously, a stamp duty of 1 percent was levied on any property valued between £125,000 and £250,000, rising to 3 percent for properties valued between £250,000 and £500,000.
The new system operates on a sliding scale, depending on the final price of the property. For example, no duty is paid on any property valued below £125,000; 2 percent is paid between £125,000 and £250,000; 5 percent on any property valued above £250,000.
In practice, that would mean stamp duty of £2,500 on a house bought for £250,000 and duty of £5,000 on a house bought for £500,000.
Different stamp duty rates apply where an individual buys an additional property. Full details are available on the Gov.uk website.
You can use HMRC's calculator to work out how much SDLT you will have to pay, which must be paid within 30 days of your transaction completing. In practice, your solicitor will likely take this payment from you and pay HMRC on your behalf.
Read more on the Homeward Legal blog about stamp duty and how much it's likely to cost.
If you're a first-time buyer, check out Homeward Legal's comprehensive First-Time Buyers' Hub where all your questions about purchasing for the very first time are covered in detail.