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Understanding Stamp Duty

Understanding Stamp Duty

What is Stamp Duty?

Stamp Duty is a tax imposed by the Government and is calculated on the value of the property being sold.  The duty is payable by the BUYER.

How Much Will I Have to Pay?

The amount is calculated as a percentage of the purchase price as follow:-

Purchase Price Stamp Duty on that portion of the purchase price
Up to £125,000 0%
Over £125,000 up to £250,000 2%
Over £250,000 up to £925,000 5%
Over £925,000 up to £1,500,000 10%
Over £1,500,000 12%

Understanding Stamp Duty

I think I paid more than this when I bought last year – is this possible? 

Yes you might have because both the rates and the basis of calculation changed in December 2014.  Previously the calculation was based on what was known as the slab system (where you’d pay a single rate on the ENTIRE property price) rather than the new system which is based on a different rate for each PORTION of the price.  Using the same example purchase prices as above the difference in duty under the previous and current systems are show below:-

Purchase Price Duty under Current System Duty under Previous System Difference
£200,000 £1,500 £4,000 -£2,500
£300,000 £5,000 £9,000 -£4,000
£600,000 £20,000 £24,000 -£4,000
£1,200,000 £63,750 £60,000 +£3,750
£2,400,000 £201,750 £168,000 +£33,750

How do I pay Stamp Duty?

How do I pay Stamp Duty?

Usually your solicitor will deal arrange submission of the relevant Stamp Duty Land Tax return and pay what you owe to the HMRC (from the funds that you have provided) within 30 days of completion. (If the purchase price is between £40,000 and £125,000, a return must still be submitted even though you won’t need to pay any Stamp Duty).

You should be aware that you’re responsible for making sure it’s all submitted on time because if it’s not paid, you’ll be charged a £100 penalty plus interest.

Click here for the HMRC’s Stamp Duty Calculator.

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