When you are buying a new home, there are so many things that you need to budget for, from finding the deposit for the mortgage to the cash needed to pay the final bill for the utilities at your previous home.
It's an expensive business and making sure you tick the boxes and do everything right can feel overwhelming at times. Whether it's ensuring you've completed the conveyancing forms correctly on the home you are selling, or it's paying the various home-moving bills that come in at the right time, it's hardly surprising that most experts reckon that moving home is one of the most stressful occasions in anyone's life.
Many will have noticed, if not followed, the story of Angela Rayner, the now former Housing Minister and Deputy Prime Minister, who was forced to resign her positions after the Prime Minister's ethics adviser established that, while she had "acted with integrity", she had nevertheless "breached the ministerial code" when it came to light that she had underpaid the stamp duty land tax (SDLT) on a home she had bought in Hove, even though she said she had sought legal advice. The problem in this case, the BBC article notes, was that Rayner had failed to seek advice from a tax expert.
The case raises the important question of who is responsible for paying stamp duty (or Land Transaction Tax (LTT) for home purchases in Wales).
Who pays Stamp Duty in the UK?
Quick Answer: The property buyer is legally responsible for paying stamp duty, though your solicitor typically handles the payment process.
There is some discussion in Government and at the Treasury to assess whether a Property Tax could replace Stamp Duty, with the onus being passed from buyer as at present to the seller, but this is in the early stages. As an idea, it is gaining some traction in certain quarters because the responsibility for paying the tax would change to the person receiving the funds for selling the home.
This is a change from the current position where the buyer is required to pay the tax bill, when they already have to find the money to buy the home in the first place.
However that discussion turns out, for the moment, payment of Stamp Duty remains part of the process of buying a home.
Current Stamp Duty thresholds and rates
The Government regularly reviews the Stamp Duty thresholds at which the tax is triggered, dependent on the agreed price of the property you are buying. They also provide occasional schemes to help first-time buyers, usually by raising the lower thresholds or reducing the percentage of the home's cost that is payable.
Key considerations include:
- Different thresholds apply if the property is your second (or third or more) home
- Higher rates apply for additional properties compared to your main home
- First-time buyer relief schemes may reduce your stamp duty bill
When you are buying a home, you need to identify how much stamp duty is required to be paid, and whether you are eligible for any governmental relief schemes that may be running.
When is payment of Stamp Duty required?
Stamp duty must be paid within 14 days of completion - this is a legal requirement you cannot ignore.
If you have triggered one or more of the stamp duty thresholds, stamp duty will be the last bill that has to be paid as part of your home-moving enterprise. This is apart from your final legal bill, which will include:
- Legal fees less the deposit you paid up-front
- Cost of any disbursements (third-party payments such as expert reports or indemnity insurance policies)
The legal requirement is for the stamp duty to be paid within two weeks of the agreed and successful completion date. The final and full amount for this tax is paid directly to HM Revenue & Customs (HMRC).
Who is responsible for paying Stamp Duty?
It's an interesting question!
Usually, your conveyancing solicitor will draw up the documentation and they will pay the stamp duty on your behalf to HMRC as one of the final steps of your transaction, along with filing ownership change of the property at HM Land Registry to show that you are now the legal owner of the property you have just bought.
Buyer vs solicitor responsibilities
However, it would be wrong to assume that it's the responsibility of your conveyancing solicitor to pay the tax bill when it has been calculated. In any purchase transaction, it is (currently) the buyer's responsibility to ensure that everything is above board. Nevertheless, it is your conveyancing solicitor's responsibility to provide you with legal advice at every step of the process.
Important: One of those pieces of guidance might be to take advice from a tax expert, so that you have all the information you need to ensure you pay the right amount of tax for your particular home purchase, factoring in the latest stamp duty requirements, and particularly where your specific transaction is more complex.
If you don't take up the recommendation, the responsibility for any tax errors lie with you as the buyer and not the conveyancing solicitor.
How do you ensure you get Stamp Duty right?
As already noted, the stamp duty tax is payable as one of the final steps of your transaction, and is usually controlled on your behalf by your conveyancing solicitor.
Since we are talking about potentially large sums, you don't want there to be any surprises. So, as part of your discussion with the conveyancer when you appoint them to manage the legal aspects of your purchase, you should cover off expectations of all types of payments, including:
- Fees to HM Land Registry
- Third-party costs
- Legal fees
- Stamp duty calculations and payment method
You also need to be clear about how it will be paid and who will do it.
And, if your conveyancing solicitor recommends that you take expert advice, it is well worth following up on that to ensure that you have everything clear in your mind and you know exactly what the final tax bill is going to be.
Frequently asked questions about Stamp Duty payment
Can I pay stamp duty myself instead of through my solicitor?
Yes, but most buyers use their solicitor to ensure correct payment and timing. Your conveyancing solicitor handles the payment process as part of their service, ensuring compliance with HMRC requirements and the 14-day deadline.
What happens if stamp duty is paid late?
HMRC charges penalties and interest on late payments. This is another reason to use professional help, as your solicitor ensures payment is made within the legal 14-day deadline after completion.
Do I need a tax expert for standard property purchases?
For straightforward purchases, your conveyancing solicitor's advice is usually sufficient. Complex situations involving multiple properties, unusual circumstances, or high-value transactions may require specialist tax advice.
Who is legally responsible for paying stamp duty
The property buyer is legally responsible for paying stamp duty. While your conveyancing solicitor typically handles the payment process on your behalf, the ultimate responsibility for ensuring correct payment lies with the buyer.
Should I use a solicitor for stamp duty payments?
Yes, using a qualified conveyancing solicitor ensures stamp duty is calculated correctly and paid on time, avoiding costly HMRC penalties and ensuring full legal compliance.
Need professional conveyancing help?
Given the complexity of stamp duty calculations and the legal requirements involved, professional conveyancing support can ensure everything is handled correctly.
Homeward Legal offers fixed-price conveyancing with a "no completion, no fee" promise for added peace of mind.
Call for a conveyancing quote or use our online quote generator.