What is Stamp Duty, and how does it affect me when purchasing a home?
2 min read
Buying your first home is an exciting milestone, but with it comes a whole new world of jargon like Stamp Duty Land Tax (SDLT).
In this article we’ll talk about:
- what it is
- whether you need to pay it
- and how to calculate it
What is Stamp Duty
SDLT is a tax applied when you buy property or land in England. The amount you pay depends on the property price and whether you qualify for any exemptions or reliefs.
In Scotland this is known as Land and Buildings Transaction Tax (LBTT).
In Wales this is knows as Land Transaction Tax (LTT)
How much is Stamp Duty
The government sets thresholds.
For England, check out the official Stamp Duty Land Tax website for accurate and up-to-date information.
If you’re purchasing a home in Scotland check out: Land and Buildings Transaction Tax (LBTT) and for Wales: Land Transaction Tax rates and bands | GOV.WALES
Buying an Additional Property or buying through a company
If you are buying your property through a company, even if its the only property the company will own, an extra 5% is added to the standard SDLT rates.
If you’re purchasing another property (such as a second home or buy to let), an extra 5% is added to the standard SDLT rates. However, if you sell your main home within 36 months, you might be able to claim a refund.
Stamp Duty for Non UK Residents
If you haven’t been in the UK for at least 183 days in the past year, you’re classed as a non UK resident for SDLT purposes. This means you pay an extra 2% on top of the usual rates. Check if you’re eligible for a refund of the surcharge.
What About Leasehold Properties
If you’re buying a leasehold home, SDLT applies to the lease price as well as the total rent over the lease term (if above a certain threshold).
Final Thoughts
SDLT might seem complicated, but understanding the basics can help you plan your finances.
This article is for information purpose only and shall not be treated as professional advice. When purchasing a property, you should consult a suitably qualified and experienced professional, such as a solicitor or accountant, to seek tax advice.
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