Understanding Stamp Duty

For anyone buying a house it can be a stressful time and understanding the rules and every little transaction can often be confusing, particularly if it is your first time. One of the more bemusing charges that you will likely incur is stamp duty land tax which is applied on any property purchase over £125,000 at ever increasing percentages and for which you, as the buyer, are responsible.

A Stamp Duty return must be completed within 30 days of the completion of your house transaction and needs to be done even if the price of your property falls below the threshold (above £40,000 and below £125,000). This is normally done by the conveyancer dealing with the transaction of the property and if it is not paid on time you could be fined £100 plus interest. Garnett Wilson are experts in conveyancing and will be able to offer you advice on this.

It used to be that the amount of stamp duty went up in blocks which meant that if you were a pound over a certain limit it would automatically send you into the higher tax bracket – greatly increasing the amount you had to pay. At the end of 2014, the government changed the rules to say that, much like our individual taxes, the rate would only apply to that amount which fell within a particular band.

The stamp duty land tax rates for England and Wales are as follows:

  • Between £0 and £125,000 you pay no stamp duty.
  • Between £125,001 and £250,000 you pay 2% on the amount over the threshold.
  • Between £250,001 and £925,000 you pay 2% over the initial threshold and then 5% over £250,000.
  • Between £925,001 and £1.5 million you pay the above and then 10% on any value over £925,001.
  • Over £1.5 million you pay the above rates and then 12% on any of the value that falls above the £1.5 million mark.

Normally everyone has to pay stamp duty but there are a few areas where you can avoid paying it or have the amount reduced. You can of course get a slight reduction by asking the seller or estate agent to reduce their price below the nearest threshold. This was much more of a bargaining chip for house buyers in the past when stamp duty went up in blocks and could mean the difference of a few thousand pounds.

If you are divorcing or separating then you can avoid stamp duty when you transfer property to your spouse or partner and your solicitor will be able to advise you on this. If the deeds of a property are transferred to someone else through something like a will or as a gift then the recipient doesn’t normally have to pay stamp duty. If you are exchanging properties with another person, though, you will both need to pay stamp duty on the amount that your house is sensibly valued at the time.

Garnett Wilson Conveyancing Services are property lawyers based in central Southend and regulated by the Council for Licensed Conveyancers. Christine Wilson is a Licensed Conveyancer and a Legal Executive, with over 27 years’ experience in property law. Juliet Garnett is a Fellow of the Chartered Institute of Legal Executives and a property lawyer with 26 years’ working experience.

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